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The recent depreciation of the Swiss franc and renewed increase in economic activity has allowed the Swiss National Bank (SNB) to keep policy on hold for the time being. But we think that renewed upward pressure on the currency and further export weakness …
17th September 2015
The likelihood that inflation will soon fall, as well as signs that Norway’s economy has continued to slow in Q3, is likely to prompt the Norges Bank to loosen policy again next week. … Norges Bank likely to cut its policy rate next …
16th September 2015
Whichever party wins this Sunday’s Greek election is likely to stick broadly to the conditions of the new bailout in the near term. But even an austerity-minded government will struggle to meet future budget goals as the economy underperforms. …
15th September 2015
September’s ZEW survey confirmed that recent market turmoil and concerns over the global environment have had an adverse impact on German investor confidence. For now, though, the economy itself remains robust. … German ZEW …
The euro-zone’s goods trade surplus rose to a record high in July, adding to the evidence that the economy got off to a good start in Q3. But we suspect that the trade surplus will fall in the second half of the year as the effects of the weaker euro …
July’s rise in industrial production merely offset the declines in the previous two months, so is not the beginning of a stronger upward trend in the sector. The survey evidence points to fairly sluggish growth over the rest of the year. … Euro-zone …
14th September 2015
We don’t expect the prospect of higher US interest rates to hit the euro-zone too hard. But the ECB should not take any chances and certainly should not rely on higher US interest rates to lower the euro and boost the economy. … Will Fed lift-off hit or …
11th September 2015
It looks increasingly likely that the ECB will expand its asset purchase programme, possibly even as soon as next month. We think that the Bank will step up the pace of purchases, perhaps to €80bn per month. It might also suggest that those purchases will …
10th September 2015
Ireland’s impressive recovery continued in Q2. And with the conditions in place for sustained rapid growth, it is set to remain the euro-zone’s fastest-growing economy. … Ireland GDP …
Anxiety about Grexit may have subsided but the underlying issues have not changed. Greece still needs a weaker currency. The well-worn argument that Greece would not be able to take advantage of a weaker currency because it is a fairly closed economy has …
8th September 2015
Revisions to euro-zone GDP showed that the economy was slightly stronger in the first half of the year than previously thought. However, with inflation likely to fall and growth remain sluggish, we still think that the ECB will expand its policy support. …
Since the financial crisis, internal devaluation appears to have provided only a modest boost to Ireland’s trade balance. More important to the economic recovery has been the pick-up in domestic demand. Ireland has also benefitted from a number of …
7th September 2015
July’s German industrial production figures revealed a smaller than expected rebound after June’s decline and put an early dent in hopes of a re-acceleration in growth in the third quarter. … German Industrial Production …
Despite the better tone to the economic data coming out of the euro-zone in recent weeks, we still expect growth to slow in the second half of the year as the twin tailwinds of the lower oil price and weaker euro fade. As such, last week’s hints from ECB …
4th September 2015
While the European Central Bank (ECB) left its key policy instruments unchanged today, changes to its bond purchase limits and President Mario Draghi’s dovish signals appeared to pave the way for an increase in its policy support in the coming months. … …
3rd September 2015
The rise in euro-zone retail sales in July more than offset the decline in June and suggests that the consumer recovery remains on track. Meanwhile, the final PMIs highlighted the continued poor performance of the French economy. … Euro-zone Retail Sales …
The decision by Sweden’s Riksbank to leave its monetary policy stance unchanged suggested that it has been reassured by the recent run of better-than-expected activity and inflation data. But with inflation still below zero and no let-up in deflationary …
While the crisis in Greece appears to have receded at least temporarily, the euro-zone still faces serious challenges in the form of weak growth and persistent deflation risks. As the Chart below shows, the recent weakness in oil prices and rise in the …
2nd September 2015
The euro-zone’s peripheral economies appear to have strengthened their fiscal positions further at the start of Q3. But this year’s budget targets still look elusive for most. Greece, in particular, will struggle given the renewed slump in economic …
1st September 2015
The latest euro-zone unemployment data offered hope that the slow recovery in the region’s labour market has not gone into reverse. But the bigger picture is that unemployment remains too high to boost wage growth and inflation. … Euro-zone Unemployment …
Emerging Asia's PMIs remained weak in August, suggesting the region’s manufacturing sectors continue to struggle. In the three economies where the PMIs most closely track the hard data, the surveys point to further declines in manufacturing output. … …
August’s inflation data confirmed that price pressures in Germany are very subdued,underlining the need for continued and perhaps increased ECB policy support. … German Flash CPI …
28th August 2015
We are fairly relaxed about the impact of a slowdown in China on the euro-zone. Most importantly, this is because the concerns about the Chinese economy look overblown. And in any case, the direct trade links between the euro-zone and China are fairly …
August’s EC business and consumer survey provides some reassurance that the eurozone’s economic recovery has continued in Q3, despite the turmoil in global stock markets this month. But the pace of growth is still fairly weak. … EC Business & Consumer …
Q2’s GDP release revealed that Switzerland has so far avoided a recession despite the strength of the franc. But it seems very unlikely that positive contributions from nettrade can be sustained and we see activity contracting again before long. … Swiss …
Q2’s GDP release revealed that Switzerland has so far avoided a recession despite the strength of the franc. But it seems very unlikely that positive contributions from net trade can be sustained and we see activity contracting again before long. … Swiss …
The rise in the euro exchange rate has put the onus on the ECB to maintain and perhaps increase monetary policy support. We doubt that the Bank will announce any policy changes following its meeting on 3rd September as it downplays risks surrounding …
27th August 2015
Although Denmark’s central bank has started to unwind some of the special measures that it introduced earlier this year to cap upward pressure on the currency, we still think that the deposit rate is likely to remain at record lows until at least mid-2016 …
July’s euro-zone monetary data suggest that Q2’s slowdown in GDP growth is not the beginning of a more substantial downturn. Nevertheless, growth is likely to remain sluggish. And the problems in Greece’s banking sector are far from over. … Euro-zone …
The strong expansion in Spain’s economy in Q2 was powered by domestic demand. But this partly reflected the effects of lower oil prices and looser fiscal policy ahead of the general election. As these boosts fade, GDP growth is likely to slow. … Spanish …
France’s Government has finally started to tackle the country’s weak labour market. But we are sceptical that the reforms so far will be sufficient and think that more ambitious measures will be needed to address its structural deficiencies and get France …
26th August 2015
Agriculture accounts for 2% of GDP while the livestock sector is probably 1% or less. Accordingly, a 10% reduction in livestock output would reduce GDP by 0.1% for as long as it lasts. This accords with estimates from the National Farmers Union, which put …
25th August 2015
August’s German Ifo survey suggested that GDP growth had continued to accelerate in Q3. But expectations for the future were weakening even before the latest rise in the euro, suggesting that growth may be nearing a peak. … German Ifo Survey (Aug) & GDP …
Finland’s unemployment rate has been on the rise for the best part of three years. While we do not think that it will climb much further, we do not expect it to fall much over the next few years either. This will prevent Finland from contributing to the …
24th August 2015
Today’s rate cut by the Sedlabanki is likely to be a one-off. Indeed, the recent acceleration of economic growth suggests that the risks to the Bank’s new inflation forecasts are tilted to the upside. … Rate cut in Iceland set to be a …
Prime Minister Tsipras’ decision to call an election threw the Greek situation back into disarray only hours after he secured Greece’s first bailout payment last week. Tsipras should win, perhaps with a stronger mandate to pass reforms. But as no major …
21st August 2015
August’s rise in the euro-zone composite PMI came as a relief after last month’s fall and signs of a slowdown in other indicators. But it still points to modest growth that will do little to erode the spare capacity in the economy. … Euro-zone Flash PMIs …
Inflation dynamics continue to hamper Portugal’s attempts to deal with its huge debt problems. The country may need to implement more fiscal austerity as it struggles to pay down its debt. … Portugal’s fiscal consolidation hampered by low …
20th August 2015
Norway’s Q2 GDP data showed that lower energy prices continued to weigh on the oil and gas sector. But the mainland economy also slowed. We suspect that this will prompt the Norges Bank to loosen monetary policy next month. … Norwegian GDP …
Norway’s Q2 GDP data showed that lower energy prices continued to weigh on the oil and gas sector. But the mainland economy also slowed. We suspect that this will prompt the Norges Bank to loosen monetary policy next month. … Norwegian GDP (Q2 …
The German Parliament’s approval of the third Greek bailout should prompt payments allowing Greece to narrowly avoid default yet again. But Grexit risks have not disappeared and are likely to flare up in the autumn when Greece fails to pass its first …
19th August 2015
Today’s rate hike by Iceland’s central bank is likely to be part of a sustained tightening cycle to counter strong domestic demand growth and inflationary pressures. And we think further rate increases will be needed in the coming months, as the …
The relief rally in Chinese equities prompted by additional policy stimulus has turned global sentiment around, but a sustained recovery in commodity prices will probably require hard evidence that the Chinese economy is picking up again. Fortunately, …
18th August 2015
June’s euro-zone goods trade data suggested that net trade boosted GDP growth in Q2. But as the effects of the weaker euro fade, export growth might soon slow again. … Euro-zone Trade …
17th August 2015
The remaining hurdles to the implementation of the third Greek bailout look likely to be cleared in the next few days. But the deal could unravel quite quickly if Greece fails to meet the extremely demanding economic and fiscal conditions upon which it …
14th August 2015
