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Euro-zone current account imbalances have narrowed since the financial crisis, and there are good reasons to think that they will not return to pre-crisis levels for some time. But policymakers’ response to remaining imbalances will continue to impart a …
29th July 2015
The majority of European countries recorded a rise in commercial property investment in the second quarter, with the peripheral euro-zone markets generally leading the pack. Despite the latest RICS survey showing that investor sentiment indices have …
28th July 2015
Portugal’s exports have been amongst the euro-zone’s fastest growing over the last few years. But the country’s external position remains very fragile, leaving it vulnerable to renewed market pressures. … Export success masks Portugal’s external …
June’s euro-zone monetary data point to a continued economic recovery, although they suggest that growth will not gather much more pace. … Euro-zone Monetary Indicators Monitor …
27th July 2015
July’s rise in German Ifo business sentiment is an encouraging sign that the recovery has continued despite the Greek crisis, although it does not seem to be gaining much pace. … German Ifo Survey …
Greece last week passed the necessary reforms to start negotiations with its creditors on a third bailout. But with the country back in recession, it will struggle to meet the creditors’ fiscal goals. Indeed, euro-zone fiscal data for Q1 last week showed …
24th July 2015
Greece’s move towards a third bailout has brought relief to Central and South Eastern Europe where concerns about contagion were very real, particularly in the Balkans. While it is too early to say whether there has been a hit to consumer and business …
July’s renewed fall in the euro-zone composite PMI offers some early support to our view that the fragile recovery will slow in the second half of the year. … Euro-zone Flash PMIs …
Today’s weak PMI reading from China will reinforce the negative sentiment towards commodities, notably industrial commodities, but demand should still pick up on further policy easing. Meanwhile, slightly softer numbers from the euro-zone confirm it is …
Despite slowing auto sales in China, we believe autocatalyst demand for platinum and palladium will increase by at least 3% in 2015, helping to underpin our positive view on the prices of both metals. While recent price weakness has prompted us to revise …
23rd July 2015
The spread between government bond yields in Germany and the UK is less indicative of the relative strength of the two countries’ economic outlooks than it was in the past. As such, in contrast to most of the last 15 years, the spread between German and …
22nd July 2015
The recent decline in the euro suggests that the markets see the new Greek bailout plan as less favourable for the single currency than a swift Grexit. But the driving force on the euro over the next year or so will be the widening divergence between …
Spain’s and Portugal’s recoveries offer some hope for Italy, the periphery’s laggard. But Italy’s exports are still too uncompetitive and its firms too unprofitable to mimic the export and investment-led recoveries seen in Iberia. So Italy’s colossal …
Even if the planned new Greek bailout is quickly and smoothly implemented, the economy looks set to remain in a deep and prolonged recession. … Will the Greek economy ever return to …
21st July 2015
Even if the planned new Greek bailout is quickly and smoothly implemented, the economy looks set to remain in a deep and prolonged recession. … Greek elections won’t ensure passage of …
20th July 2015
The plan for a third Greek bailout has cleared a number of hurdles over the last week, including provisional approval by the Greek and German parliaments. But there are plenty of obstacles yet to be negotiated, including the fiscal targets, the proposed …
17th July 2015
Real wages have typically fallen sharply after a major currency crisis and devaluation but have then begun recovering within a couple of years. The pace at which they have picked up has varied enormously. In some cases, there has also been a sharp rebound …
The latest European and North American cocoa grinding data continue to point to subdued demand. Combined with a rebound in Ghanaian production, we think that the price of cocoa will fall this year. … Subdued demand will undermine cocoa …
Spanish households will struggle to maintain their recent impressive rates of spending growth. And with households facing years of stagnant wages and high unemployment, opposition to further economic reforms may build. … Spanish households face tougher …
The broader European economy has continued to weather the Greek crisis well, helped by lower oil prices and, in the euro-zone itself, the decline in the euro exchange rate. But these positive forces look likely to fade in the second half of the year and …
16th July 2015
ECB President Mario Draghi maintained a distinctly dovish tone at today’s Governing Council meeting, reiterating the Council’s willingness to step up its QE programme if the economic outlook or financial market conditions worsen. But he was more …
Greece’s future in the euro-zone is still far from secure, and upcoming general elections in Portugal, Spain and Ireland could lead to significant political changes. Nevertheless, given that property markets have generally shrugged off such risks so far, …
May’s euro-zone goods trade data suggested that the depreciation of the euro over thepast year is still only providing a modest boost to export growth. … Euro-zone Trade …
France’s June inflation data confirmed that price pressures remain very subdued in the euro-zone’s second-largest economy. And the substantial slack in the labour market means that core inflation is likely to remain very weak. … French CPI …
15th July 2015
Subdued economic growth and similarly weak office sector demand have resulted in muted take-up volumes in Brussels. The slow first half of the year means that we have trimmed our rental growth forecasts for 2015, and there are also growing risks to our …
14th July 2015
While yesterday’s announcement of an agreement to provide Greece with a third bailout was greeted with understandable relief, there are still very big hurdles to be cleared before the deal is finalised. … Greek “deal” still has major hurdles to …
May’s weak industrial production data and the fall in German ZEW investor sentiment in July suggested that the euro-zone’s fragile recovery may be slowing. … Euro-zone Industrial Production (May) & German ZEW …
The fall in Sweden’s headline inflation rate below zero in June vindicated the Riksbank’s decision earlier this month to cut its policy rate further and extend its bond-buying programme. But we think that it still has more work to do. … Swedish Consumer …
Today’s tentative deal for a new Greek bailout clearly reduces the risk of a near-term exit from the single currency. But significant hurdles must be overcome before the deal is finalised. And the negotiations over debt restructuring, which have been put …
13th July 2015
There appears to be a chance that Greece and its creditors will come to a last minute agreement on a new bailout which avoids an imminent Greek departure from the currency union. But there are many hurdles left to negotiate before the deal is finalised. …
10th July 2015
If a Greek exit from the euro-zone resulted in substantial market turmoil, the ECB would probably respond by unleashing its fabled OMTs. This is a potentially powerful tool to limit contagion. But practical constraints on the size of OMTs, as well as …
The rebound in French and Italian industrial production in May came as a welcome relief after Q2’s weak start and the disappointing German data earlier in the week. But across the euro-zone as a whole, industry is still likely to have struggled in Q2. … …
The mechanisms through which the deepening crisis in Greece could spill over to banking sectors in Emerging Europe are complex and commonly misunderstood. However, as we explain in this Watch, they have the potential to be explosive. … “Grexit” and the …
9th July 2015
The ECB’s Governing Council may have to playboth villain and hero over the coming week, effectively forcing Greece out of the euro-zone bypulling the plug on Greek banks’ life support and then clearing up the resulting mess. Who’d be acentral banker? … …
The French economy’s decent start to 2015 is unlikely to have been sustained in Q2. Looking further ahead, we think that the recovery will struggle to gain significant pace over the next few years. In particular, high unemployment and inadequate reforms …
The resilience of the euro against the dollar to the deepening crisis in Greece – the exchange rate is currently close to its level at the end of May – has probably been due to a combination of factors. These include the unwinding of large short positions …
8th July 2015
EC President Jean-Claude Juncker’s claim that Greece’s creditors now have a “detailed Grexit scenario” may be a bluff to strengthen their bargaining position. But it is not hard to imagine what the key elements of a Plan B for Greece would consist of. … …
Although the ECB’s OMT programme may allow Portugal to weather a Grexit, the country still faces serious challenges that might jeopardise the country’s long-term position within the currency union. … Is Portugal the euro-zone’s next weakest …
German logistics occupier demand should increase over the coming quarters. Yet with the sector already facing pressure from rising wages, occupiers are set to take up space further away from prime areas. As a result, we expect German rental value growth …
7th July 2015
While Greece and its creditors look set to make one last attempt to reach an agreement, it might very soon be time to accept the inevitable and refocus efforts on how best to manage the country’s exit from the currency union. … Time to let Greece …
Sweden’s exporters are finally starting to feel the benefits of the krona’s decline over the past couple of years. But firms’ desire to widen profit margins, weak global demand and uncertainty about the krona in the face of ECB stimulus and the Greek …
May’s German industrial production figures supported other evidence suggesting that the euro-zone’s main growth engine is unlikely to have picked up speed in Q2. … German Industrial Production …
The prices of precious metals have not responded as we had anticipated to the growing risks of a Greek exit (“Grexit”) from the euro. We are therefore revising our end-year forecasts for gold, silver, platinum and palladium lower, largely to reflect the …
6th July 2015
The combination of a Greek “no” vote, signs of rising US oil production, positive signals of a nuclear deal between Iran and the West as well as slowing Chinese demand for imported oil means that we are nudging down our oil price forecasts for this year …
While yesterday’s resounding Oxi (No) vote in the Greek referendum does not guarantee a Greek exit from the euro-zone, it has surely raised the probability of such an event further above 50%. … Oxi vote pushes Grexit probability further above …
Sunday’s Greek referendum result looks likely to be very close. But regardless of whether the outcome is Nai or Oxi , unless any resulting deal includes a substantial form of debt relief, the crisis will not come to an end and Greece’s continued …
3rd July 2015
Although euro-zone retail sales only rose slightly in May, the outlook for consumer spending is bright. And the rise in June’s composite PMI suggested that the wider recovery was sustained in Q2, despite the crisis in Greece. … Euro-zone Retail Sales …
The large degree of spare capacity in the Greek economy suggests that it could perform well if the constraints of fiscal austerity and a strong currency were removed via a euro-zone exit. But Greece’s performance would depend on policies to tackle the …
