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First report of the Trilogy: “Why the Chinese Economy Could not Surpass that of the US”
The Chinese residential market is the largest asset class in the world with its value exceeds that of the U.S. equities, bonds or real estate. However, after 20 years of growth, the trend broke. The Chinese real estate bubble began to burst at the end of 2021. Since then, and after a more than remarkable correction, the consensus is starting to agree be that "the worst is behind us". At Arcano Research we disagree. In our opinion, the real estate situation in China has remarkable parallels with the Spanish bubble of 2007. For anyone interested in visualizing what lies ahead for China in the years to come, there is nothing better than understanding what happened in Spain between 2007 and 2013 and glimpsing the consequences in terms of growth, potential financial contagion and commodity trends. This is the first in a series of three reports that we will publish on our view of China and whose conclusion, once again, departs from the consensus: it will be very difficult for China to surpass the United States in terms of economic growth.
The World in the Aftermath of COVID-19: Appearance Can Be Deceptive (November, 2020)
Video and support chartbook of the conference 'The World in the Aftermath of COVID-19: Appearance Can Be Deceptive' in which our economists, Ignacio de la Torre and Leopoldo Torralba, presented the conclusions of the report about the structural consequences of the coronavirus pandemic underway.
Inflation, Disinflation, Deflation: What Awaits after Coronavirus? (June, 2020)
A major crisis has many material economic side effects. A widespread concern is how to pay off the enormous quantities of public debt governments are generating to combat it. The answer to this question relates to an additional medium-term effect: inflation and its sharp fluctuations. The hyper-expansive fiscal and monetary policies implemented by countries today are partially reminiscent of what happened during and after World War II, after which inflation ups and downs were exceptional.
Will the Coronavirus Spread to Spanish Home Prices? (May, 2020)
The economic and social crisis unleashed by the coronavirus will have very significant economic and structural consequences for a host of sectors. In this report, we focus on Spanish residential real estate, to answer the questions:
Detailed Impact of Coronavirus on the Spanish Economy (April, 2020)
This chartbook offers a detailed description of the hypotheses and the underlying methodology behind the model we use to make our economic projections for Spain. The model analyses the most and least affected sectors, the most sensitive elements of GDP and the foreseeable monthly evolution throughout 2020 and 2021, of key variables. We also calculate the impact of fiscal responses, estimating GDP before and after their effect.
The Case for Spain I (November, 2012)
Spanish asset prices have been massacred in 2012, mainly as a consequence of poor investment decisions and policies from the past. Yet, some justifications behind these price movements are biased. We intend to demonstrate in this report why this is so, as we look in detail at some of the country’s key macroeconomic and microeconomic data and challenge some of the negative myths about the economy. We also intend to prove that most areas of the Spanish economy are solvent, as assets well exceed debts. Ultimately, Spain is solvent, but illiquid. Liquidity is and will be provided by the eurozone, and this will avoid illiquidity turning into insolvency. Spain is growing through external demand (exports and tourism), which reduced trade deficit from €160 bn. in 2007 to €40 bn. by 2012. This growth, in our opinion, is structural, not short term in nature. It should drive Spain to a current account surplus by 2013, and it should reduce the country’s international debtor position.
How Permanent is Transitory Inflation? – The Case of Portugal (July, 2022)
In June, consumers googled ‘inflation’ more often than at any time since the launch of Google Trends. In the face of surging economic uncertainty, inflation has indeed been its main driver. To this end, a continued monitoring of the situation is required to further gain an insight into its actual nature as well as to be able to accurately forecast its evolution. Based on the latest data released by the Portuguese National Statistics Institute, we have produced the chartbook 'How Permanent is Transitory Inflation? – The Case of Portugal' which attempts to provide an answer to the following questions:
Portugal and the World in 2022
Since the beginning of 2020, we have seen entire countries enter into total lockdown, record numbers of people unemployed and inflation running far above what was considered normal in recent decades. Along with all the medical uncertainty came the constant doubt about the future of the global economy. Arcano Partners has developed a tool designed to help investors and companies master the elements to make the right decisions in this macroeconomic environment. Arcano stands out for being completely independent from big businesses and political ideologies and publishes a comprehensible analysis with a nearly ten-year track record of accurate predictions. It’s with great enthusiasm and pleasure that we extend our analysis to Portugal, aiming to offer you an in-depth study of the macro issues that are currently the most relevant to framing any business in Portugal. The chartbook we are publishing today supported last week’s presentation of our Chief Economist, Ignacio de la Torre, delivered in front of an audience made up by Portuguese corporates and investors.
Portuguese Economy and Real Estate Sector in the Face of Global Uncertainty
This chartbook summarises the main trends in Portugal (and links them to the Spanish outlook), assessing variables such as demand for houses, supply, prices and risks (political, financial, etc.), to conclude whether the Portuguese real estate upward phase still has some way to go or not.
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