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The growing recognition that highly indebted economies need more than temporary loans has caused the spotlight to turn on Italy. With EU taxpayers unlikely to stump up enough cash to rescue such a large economy, an Italian crisis might be the trigger for …
14th July 2011
May’s euro-zone industrial production data confirm that the recovery in the sector is far past its peak and suggest that growth in the economy as a whole slowed pretty sharply in the second quarter. … Euro-zone Industrial Production …
The continued failure of European policymakers to agree on a new package to support Greece and the growing signs that larger economies like Spain and Italy are being dragged further into the crisis could mark the beginning of the end for the single …
13th July 2011
Last week’s move by credit rating agency Moody’s to cut Portugal’s rating to below investment grade was a stark reminder that default concerns are not confined to Greece. While the move was fiercely criticised by policymakers for ignoring key differences …
12th July 2011
After hiking interest rates to 1.5% as expected, the ECB took a hard line today on both conventional policy and the prospect of Greek debt restructuring. We think that it will eventually soften on both fronts, but its unsupportive tone presented a clear …
8th July 2011
May’s sharp increase in German industrial production suggested that the euro-zone’s largest economy was still performing very well, but we doubt that this will last. … German Industrial Production …
The slowdown seems to be broadening to the domestic economy, not only in the periphery but also in the core economies. While activity in the industrial and external sectors has slowed further, surveys suggest that the services sector recovery may also be …
7th July 2011
May’s drop in euro-zone retail sales provided further evidence that the intensifying effects of the fiscal squeeze will leave consumers with little chance of taking up the reins as the external and industrial recoveries wane further. … Euro-zone …
6th July 2011
The Swedish Riksbank once again raised interest rates and reiterated that it expects more to come. While we expect further hikes in the short term, we think that the pace of monetary tightening will be a little more gradual than the Bank’s forecasts …
The Swedish Riksbank once again raised interest rates and reiterated that it expects more to come.While we expect further hikes in the short term, we think that the pace of monetary tightening willbe a little more gradual than the Bank’s forecasts …
5th July 2011
The risk of an imminent Greek disaster appears to have eased after the Greek parliament passed the crucial medium-term fiscal bill last week. But European policymakers’ inability to deal with the crisis quickly and decisively is hitting the rest of the …
Growth in remittances from Overseas Filipino Workers (OFW) to the Philippines has slowed since the 2008-09 global crisis. However, we believe that remittances growth is likely to stabilise rather than worsen further in the remainder of 2011. The upshot is …
2nd July 2011
The ECB seems certain to deliver the pre-signalled interest rate hike to 1.5% at its July policy meeting. Accordingly, the key interest will be in what clues, if any, it gives on the likely path of rates in future months and what it makes of the most …
1st July 2011
The Portuguese government’s latest efforts to implement extra fiscal measures to ensure it meets its budget deficit target are encouraging. But even if the Government manages to push through the huge fiscal squeeze planned this year, there are hidden …
June’s euro-zone CPI inflation figures are likely to prompt the ECB to maintain a pretty hawkish tone at next week’s press conference. … Euro-zone Flash CPI & German Unemployment …
The latest data show that euro-zone money and credit growth remain subdued, supporting the view that CPI inflation will fall below the ECB’s target as the boost from energy and food subsides. While a July interest rate hike appears inevitable, we still …
While plans for a Greek debt roll-over and a second bail-out should ease immediate default concerns and funding pressures, Greece is still struggling to rein in its budget deficit, highlighting the challenges which may lie ahead for Ireland and Portugal. …
30th June 2011
The fact that the Greek parliament has passed the Government’s medium-term fiscal plan clearly reduces the chances of a near-term disaster, but the country remains in a precarious position. … Greek disaster averted, for now at …
June’s EC business and consumer survey dealt a further blow to hopes that sustained strong growth in the euro-zone’s core economies might help to ease the crisis in the periphery. … Euro-zone EC Survey …
June’s CPI figures suggest that German inflation remains reasonably well contained. But this is unlikely to stop the ECB from increasing interest rates again next week. … German Flash CPI …
29th June 2011
The French plan for banks to roll over a significant chunk of their maturing Greek government debt could significantly reduce Greece’s near-term funding pressures. But we doubt that the roll-over plan and second bail-out package will prevent Greece from …
Developments last week suggest that the Greek Government will receive the fifth tranche of its initial bail-out package by early July. What’s more, although the finer details on the form of any private sector participation in Greece’s second bail-out …
28th June 2011
June’s rise in the Ifo index defies other recent evidence that Germany’s impressive recovery is slowing. Nonetheless, we still think that GDP growth will slow quite sharply over the remainder of the year. … German Ifo Survey …
25th June 2011
The sharp fall in the flash euro-zone PMI in June provides further signs that the underlying pace of GDP growth is slowing, making it increasingly likely that a bout of strong growth will not solve the euro-zone’s mounting problems. … Euro-zone Flash PMIs …
24th June 2011
June’s sharper than expected fall in the headline German ZEW index brought further signs that the German economic recovery has passed its peak. … German ZEW …
22nd June 2011
The Irish and Portuguese public finances are not in as precarious a position as those of Greece, but we think that there is a strong chance that both economies will eventually have to follow in Greece’s footsteps and try to persuade private sector …
The growing political uncertainty within Greece and fears that European policymakers will not step in and take decisive action to resolve the crisis has pushed the Greek Government closer to the brink. Admittedly, it seems likely that enough financial …
21st June 2011
April’s euro-zone trade data do nothing to alter our view that the external recovery in the region has passed its peak. With domestic demand set to remain weak, we expect GDP growth to slow sharply in the second half of the year. … Euro-zone Trade Balance …
18th June 2011
Crunch time appears to be rapidly approaching for Greece. While an additional bail-out package may stave off near-term disaster, a major debt restructuring seems inevitable at some point and Greece’s future in the currency union is looking ever more …
17th June 2011
May’s small fall in euro-zone CPI inflation is unlikely to prevent the ECB from hiking interest rates again in July. But with Q1’s weak employment figures supporting our view that domestic demand will remain subdued, we continue to think that interest …
As expected, the Swiss National Bank left its interest rate target unchanged at today’s meeting. With the Bank striking a slightly more downbeat tone in its statement and the Swiss franc’s strength keeping inflation subdued, we continue to think that a …
16th June 2011
April’s euro-zone industrial production figures supported the view that the recovery in the wider economy has peaked and that growth may slow quite sharply in Q2 . … Euro-zone Industrial Production …
Our expectation that the euro would fall against the US dollar as the fiscal crisis deepened has not been borne out and we now expect the euro to stay higher for longer. But this unwanted strength will further increase the risks of an eventual euro-zone …
European policymakers will hope that a second bail-out package will provide Greece with more time to show that its fiscal and structural reforms are working. But we are far from convinced and still expect a major default to take place eventually. … …
15th June 2011
Recent developments suggest that Spain may have started to recouple with the likes of Greece, Ireland and Portugal. Over the coming months, Spain is likely to face a number of tricky hurdles and could eventually be forced to be the fourth euro-zone …
14th June 2011
President Trichet last week stressed again the ECB’s general opposition to a restructuring of Greek debt. But he left the door slightly open to a “voluntary” agreement in which bondholders would commit to exchange maturing or soon-to-mature Greek bonds …
ECB President Jean-Claude Trichet struck a hard line on the euro-zone’s debt crisis today by both signalling an interest rate hike in July and again ruling out a debt restructuring for Greece. But on the latter, the ECB appears to be trying to put off the …
10th June 2011
The European Central Bank’s continued opposition to any form of sovereign debt restructuring in the euro-zone remains a major short-term obstacle to plans for a Greek debt “rollover”. But the ECB cannot put off the inevitable forever. … ECB trying to hold …
8th June 2011
The dust clouds may have cleared but economic gloom continues to hang over Iceland. While the economy returned to growth in Q1, conditions for consumers remain grim and large risks remain over plans to continue the lifting of capital controls. … Economic …
The breakdown of euro-zone Q1 GDP provided some support to our view that the pace of recovery in the region peaked in the first quarter and that growth is likely to be materially slower in Q2 and beyond. … Euro-zone GDP Breakdown …
Further falls in euro-zone leading indicators and the first hard data for Q2 suggest that the economic recovery may have passed its peak. After three consecutive falls, the EC’s Economic Sentiment Indicator is consistent with annual GDP growth remaining …
7th June 2011
April’s pick-up in euro-zone retail sales may look like an encouraging sign that euro-zone consumers are defying the fiscal squeeze. But the bounce is likely to have been a one-off boosted by Easter, as underlying retail sales growth remains weak. … …
Last week’s news of proposals for a voluntary “rollover” of Greek debt brought some hope that the policy impasse over the crisis may soon be over. Crucially, there were signs that the ECB − until now steadfastly opposed to any form of restructuring − …
6th June 2011
ECB President Jean-Claude Trichet will use Thursday’s post rate-announcement press conference to signal another rise in interest rates at the following meeting in July. But with growing signs that the euro-zone’s economic recovery is starting to lose …
2nd June 2011
A second Greek bail-out package, perhaps involving some form of voluntary debt rescheduling, won’t address Greece’s fundamental problems and won’t prevent a major restructuring in the future. … Greek bail-out 2 will merely delay the …
1st June 2011
While Spain has made good progress in reducing its central government budget deficit this year, its growing regional deficits are a cause for concern. Meanwhile, the Greek and Irish deficits are still running well above last year’s path. … Euro-zone …
The recent strength of the euro-zone economy has masked widening divergences within the region. And with even in the core economies set to slow over the coming quarters, it would be wrong to expect strong growth to address the fiscal crisis and ensure the …
31st May 2011
The Swiss economy expanded only modestly in the first quarter of this year. With the strong franc likely to hit exports over the coming quarters, growth looks likely to remain fairly lacklustre. … Swiss GDP …
