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The latest euro-zone retail sales data and PMIs provided reassurance that the euro-zone economic recovery continued at the start of the year. … Euro-zone Retail Sales (Jan.) & Final PMIs …
4th March 2015
Recent economic developments in the euro-zone suggest increased scope for yield compression in commercial property markets. As such, in our latest Analyst we have increased our forecasts for capital value growth across most markets. … QE to boost …
After consolidating their fiscal positions in 2014, the peripheral economies had a mixed start to 2015. Ireland and Italy both fared comparatively well but Portugal and Greece struggled. … Euro-zone Fiscal Monitor …
3rd March 2015
The Swiss economy posted another healthy expansion in Q4, with both net exports and domestic demand continuing to rise. But the franc’s surge since then may well see the economy back in recession before long. … Swiss GDP …
The Swiss economy posted another healthy expansion in Q4, with both net exports and domestic demand continuing to rise. But the franc’s surge since then may well see the economy back in recession before long. … Swiss GDP (Q4 …
February’s continued fall in euro-zone consumer prices and the still-high rate of unemployment in January confirm that the ECB faces an uphill battle against the threat of deflation. … Euro-zone Flash CPI (Feb.) & Unemployment …
2nd March 2015
The markets responded with some relief to last week’s provisional approval by the institutions formerly known as the troika of the proposal advanced by the Greek government for a four-month extension of its bailout. But even if an extension is finalised, …
27th February 2015
February’s energy-related increases in inflation in Germany, Spain and Italy did little to reduce the threat of a prolonged bout of deflation in future. Headline rates remain either extremely low or negative and underlying price pressures are very weak. …
We do not expect the latest dispute between Russia and Ukraine over natural gas to disrupt the supply to Western Europe. But even if did, the EU should still be able to cope reasonably well as warmer weather reduces seasonal demand for gas and alternative …
The unexpected surge in Swedish GDP in Q4 confirms that the economy is recovering at a solid pace and reduces the chances of a Japanese-style period of stagnation. But with prices continuing to fall, the Riksbank will still need to do more. … Swedish & …
The ECB is unlikely to announce any new policies after its meeting next week as it prepares to implement the quantitative easing programme unveiled in January. President Draghi will claim that QE is already having a positive impact, even before the bulk …
26th February 2015
Although French employment growth is forecast to remain lethargic, the limited development pipeline and occupiers’ preference for modern, centrally-located space will drive an improvement in the balance between supply and demand in the Paris CBD. As such, …
January’s euro-zone monetary data showed that credit conditions were healthy at the start of the year, suggesting the ECB’s policy stimulus is already having an effect. … Euro-zone Monetary Indicators Monitor …
February’s EC business and consumer surveys are consistent with slow and steady growth. But even if this can be sustained as the Greek crisis continues, it will do little to erode the spare capacity in the region or to reduce the threat of deflation. … …
The recent sharp drop in the Danish krone back to its central rate against the euro suggests that the Danish Nationalbank has been successful in preserving its currency peg. But the upward pressure on the krone has not disappeared and we think that …
25th February 2015
Despite the resurgent risk of a Greek exit from the euro-zone, investors have so far remained relatively relaxed about the possible effect on emerging markets. Admittedly, there were further net outflows from global ETF and mutual funds that invest in …
The recent sharp drop in the Danish krone back to its central rate against the euro suggests that the Danish Nationalbank has been successful in preserving its currency peg. But the upward pressure on the krone has not disappeared and we think that the …
Struggles to implement a foreclosures bill and the associated suspension of the Cypriot bailout highlight that exit risks are not confined to Greece. Admittedly, the risk of a near-term “Cyxit” is relatively low. But if Greece abandons the euro, Cyprus …
24th February 2015
Weak economic fundamentals are leading to a growing divergence in the performance of Helsinki property types. While the wider market is likely to struggle further, CBD rents are set to rise gradually and strong investor demand for these assets will ensure …
23rd February 2015
In this Update , we analyse the latest agreement between Greece and the Eurogroup to assess how much ground the two sides have won on the key issues. It is clear that Greece has made huge concessions, which its Parliament might not endorse. And even if …
February’s smaller-than-expected rise in the German Ifo index may be an early sign that businesses are worried about the wider effects of the Greek crisis. … German Ifo Survey …
The idea that Greece could introduce a parallel domestic currency to improve its competitiveness while still honouring its international debts is not the solution to the country’s problems. Indeed, if Greece goes down this route, it will effectively have …
20th February 2015
Weather-related factors were responsible for the biggest moves in individual commodity prices in the past week: a cold snap in the US drove up the cost of natural gas, while further rains across key growing areas of Brazil undermined the price of arabica …
The risk of a Grexit has risen further still this week with the positions of the Eurogroup and the Greek Government seeming to be as far apart as ever. Even if a deal is cobbled together at the latest emergency meeting, it will need to be ratified by …
The impact on EMs of a Greek exit from the euro-zone would depend on the extent to which policymakers in Europe were able to limit the wider financial fallout. A “managed” exit would create significant problems for the handful of EMs with strong financial …
February’s small rise in the euro-zone composite PMI provided some reassurance that the region’s recovery may have continued in the first quarter of 2015 despite the ongoing crisis in Greece. … Euro-zone Flash PMIs …
Sterling has been one of the few major currencies to appreciate against the US dollar over the past month. As a result the real effective exchange rate is now around 5% above its ten-year average and almost 15% above its ten-year trend. Despite the recent …
19th February 2015
Dublin office take-up reached a seven-year high in 2014, helping to drive rental values up by 34%. And, with the economic outlook strong and office supply conditions tightening rapidly, 2015 looks set to be characterised by another year of strong rental …
Although the latest wranglings over Greece’s short-term financing needs have so far elicited little response from markets outside Greece, this calm may not last. As the German rebuff of Greece’s latest proposal underlines, the risk of Greece leaving the …
The first ever publication of ECB minutes confirmed that support for the new QE programme was not unanimous, suggesting that its scale will remain limited. The account, together with the Bank’s decision on emergency funding for Greek banks, added to signs …
The French Government’s decision yesterday to force its reform package through the lower house of Parliament showed a welcome political commitment to implement growth-boosting measures. But the bill has already been watered down and does not include more …
18th February 2015
A softening of economic growth in many countries across both Emerging Europe and non-euro-zone Western Europe helps to explain the relative lack of action in terms of rental movements in Q4. The big exception was Moscow, where occupier markets declined …
Today’s 2% fall means that gold has now given up most of its price gains from earlier this year. This is perhaps surprising given the ongoing uncertainty over Greece and the conflict in Ukraine, but for now the markets appear to be paying more attention …
17th February 2015
As negotiations over Greece’s bailout stalled last night, the two sides seemed as far apart as ever. A deal still seems possible, but it might require a time-consuming Greek referendum. And in the meantime, the ECB could pull the plug on Greek banks, …
February’s further improvement in ZEW investor sentiment provided some reassurance that confidence in the German economy is holding up despite the ongoing turmoil in Greece. But this could prove short-lived if Greece and the European authorities fail to …
The unexpected rise in Sweden’s headline inflation rate in January will be welcomed by the Riksbank but with prices still falling on an annual basis, we think the central bank will need to cut the repo rate further and increase its asset purchase …
The latest euro-zone trade data revealed that exporters are still not fully benefiting from the depreciation of the euro. … Euro-zone Trade …
16th February 2015
The failure of the Eurogroup last week to agree even on steps for further discussions on Greece does not bode well for the emergence of a full solution at Monday’s meeting. This could prompt nerves over whether the ECB will cut off emergency funding to …
13th February 2015
Euro-zone commercial property investment volumes reached a record high in the fourth quarter of 2014. Such strong investment flows meant that competition for assets was strong, which in turn led to yields narrowing in many markets. With property values …
Q4’s slight pick-up in euro-zone GDP growth suggests that the benefits of a falling oil price and a weaker euro are offsetting the effects of the Greek crisis for now. But growth is too weak to reduce the threat of deflation and a slowdown may be to come. …
Suggestions that China or Russia might come to Greece’s rescue are wishful thinking as it is not in the economic or political interests of either country to do so. Nor is it likely that the US will offer anything other than diplomatic support, although …
12th February 2015
With euro-zone leaders struggling to reach a workable solution to Greece’s debt problems, the chances of a Greek exit from the currency union have risen. In 2012, Capital Economics won the Wolfson Prize for our submission on how an exit might be best …
December’s disappointing stagnation of euro-zone industrial production confirmed that the region’s economy remains far too weak to ward off the threat of deflation. … Euro-zone Industrial Production …
The Swedish Riksbank today became the latest central bank to respond to the threat of persistent deflation by pushing interest rates into negative territory and launching a quantitative easing programme. We suspect it will have to do more. … Swedish …
Greece’s apparent improvement in competitiveness and recent economic recovery might suggest that it no longer requires a weaker currency and so would have little to gain from leaving the euro-zone. But a weaker currency would help to use up the vast …
11th February 2015
Q4’s solid gain in mainland GDP maintained Norway’s position as the strongest of the Nordic economies. But the ongoing effects of the fall in oil prices are likely to depress growth further over the coming quarters, probably prompting further monetary …
