The US economy contracted in the first quarter of 2015 but is expected to rebound in the coming quarters barring any major shocks. Factors that contributed to the contraction include harsh winter weather, port strikes, a stronger dollar, lower oil prices hurting investment and exports. While industrial production has weakened, business and consumer confidence remain upbeat. The Federal Reserve is unlikely to raise rates in June but a rate hike in September or December is possible if growth averages 2% and unemployment falls to 5% with inflation near 2%. However, the situation in Greece poses risks and a resolution is needed to prevent further deterioration and ensure long-term growth in Europe. A new framework with fiscal and financial integration may be needed to minimize spillover risks
Ivo Pezzuto - FEDERAL RESERVE'S RATE RISE. COMING SOON? The Global Analyst Se...Dr. Ivo Pezzuto
The document summarizes factors contributing to increased volatility in global markets in September 2015, including the potential for the Federal Reserve to raise interest rates. While the US economy has improved, global risks from China's economic slowdown and falling commodity prices pose challenges. It is unlikely the Federal Reserve will raise rates in September due to this increased turbulence, though a rate hike by the end of 2015 or in 2016 is still possible depending on how the global situation evolves.
Brazil, India, Indonesia, South Africa, Mexico and Turkey. These are the emerging countries whose currencies are currently involved into one of the most dramatic currency crises that the world remembers in recent times. This crisis is likely to become even more devastating than the big Asian financial crisis of 1997-98 and these countries could be the big casualties of the currency war sparked some months ago by the most influencing central banks. Central banks are currently engaged into a dramatic quantitative easing war, fought through the targeting of exchange rates and flooding financial markets with an ocean of liquidity. In particular, two of them have the potential to change, with their decisions, the future of financial markets: the FED and the People’s bank of China.
Economic and Structural Report August 2008, extract fromSwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document discusses the shape of the global economic recovery and associated risks. It finds that while growth rebounded in 2010, the recovery is not sustainable and a downturn is expected in 2011. Europe faces significant risks from debt problems and austerity measures. The US recovery depends on weak consumer demand as households pay down debt. China also faces recession risks from a slowing property market and investment.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
A Requiem for Quantitative Easing in the United StatesQNB Group
The US Federal Reserve ended its quantitative easing (QE) program in October 2014 after purchasing assets for over two years to stimulate the economy. QE involved the Fed purchasing private and public assets to increase the monetary base and reduce long-term interest rates. The goal was to further stimulate the economy after short-term interest rates hit zero in late 2008. While the full impact of QE is still debated, the US economy improved with unemployment falling and asset prices rising. Globally, QE flows boosted emerging markets but also led to instability when the Fed began tapering purchases in 2013. The Gulf Cooperation Council was less impacted than other emerging markets due to its closed and surplus economies.
This document provides an overview of the Trade and Development Report 2013 published by the United Nations Conference on Trade and Development. It summarizes that five years after the global financial crisis, the world economy remains fragile with slow growth. Developed countries are expected to grow around 1% while developing countries may grow around 5%. International trade has slowed significantly and global recovery is uncertain as fiscal austerity in many countries is adding to deflationary forces. A rebalancing of growth strategies in developing countries away from exports toward domestic demand is needed given weak global demand.
Ivo Pezzuto - FEDERAL RESERVE'S RATE RISE. COMING SOON? The Global Analyst Se...Dr. Ivo Pezzuto
The document summarizes factors contributing to increased volatility in global markets in September 2015, including the potential for the Federal Reserve to raise interest rates. While the US economy has improved, global risks from China's economic slowdown and falling commodity prices pose challenges. It is unlikely the Federal Reserve will raise rates in September due to this increased turbulence, though a rate hike by the end of 2015 or in 2016 is still possible depending on how the global situation evolves.
Brazil, India, Indonesia, South Africa, Mexico and Turkey. These are the emerging countries whose currencies are currently involved into one of the most dramatic currency crises that the world remembers in recent times. This crisis is likely to become even more devastating than the big Asian financial crisis of 1997-98 and these countries could be the big casualties of the currency war sparked some months ago by the most influencing central banks. Central banks are currently engaged into a dramatic quantitative easing war, fought through the targeting of exchange rates and flooding financial markets with an ocean of liquidity. In particular, two of them have the potential to change, with their decisions, the future of financial markets: the FED and the People’s bank of China.
Economic and Structural Report August 2008, extract fromSwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document discusses the shape of the global economic recovery and associated risks. It finds that while growth rebounded in 2010, the recovery is not sustainable and a downturn is expected in 2011. Europe faces significant risks from debt problems and austerity measures. The US recovery depends on weak consumer demand as households pay down debt. China also faces recession risks from a slowing property market and investment.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
A Requiem for Quantitative Easing in the United StatesQNB Group
The US Federal Reserve ended its quantitative easing (QE) program in October 2014 after purchasing assets for over two years to stimulate the economy. QE involved the Fed purchasing private and public assets to increase the monetary base and reduce long-term interest rates. The goal was to further stimulate the economy after short-term interest rates hit zero in late 2008. While the full impact of QE is still debated, the US economy improved with unemployment falling and asset prices rising. Globally, QE flows boosted emerging markets but also led to instability when the Fed began tapering purchases in 2013. The Gulf Cooperation Council was less impacted than other emerging markets due to its closed and surplus economies.
This document provides an overview of the Trade and Development Report 2013 published by the United Nations Conference on Trade and Development. It summarizes that five years after the global financial crisis, the world economy remains fragile with slow growth. Developed countries are expected to grow around 1% while developing countries may grow around 5%. International trade has slowed significantly and global recovery is uncertain as fiscal austerity in many countries is adding to deflationary forces. A rebalancing of growth strategies in developing countries away from exports toward domestic demand is needed given weak global demand.
Export Development Canada's Global Economic Outlook, Fall 2019Stephen Tapp
The document provides an executive summary and global economic outlook from EDC Economics for Fall 2019. Key points include:
- Global growth is slowing significantly, with calls of an impending global recession growing. Forward indicators showed weakness emerging over 6 months ago.
- While business investment and exports have weakened significantly, consumer spending has remained strong, driven by low unemployment. This is an unusual divergence from typical recession patterns.
- The main ongoing trade disputes, especially US-China, are disrupting global trade and causing uncertainty that is weighing on business investment. Resolution of these disputes will determine whether growth rebounds or a recession occurs.
- The global economic outlook forecasts a growth slowdown in 2019 followed by a pickup in 2020-2021
The document summarizes an OECD report which finds that global economic growth remains weak due to low trade, investment, and commodity prices. While monetary policy has been accommodative, fiscal policy in major economies has been contractionary and the pace of structural reforms is insufficient. Collective fiscal action and faster structural reforms are needed to boost global demand and reduce financial stability risks from emerging markets' high debt loads and volatile capital flows.
The Fed kept interest rates unchanged in September due to concerns about slowing global growth and volatility in financial markets. This left investors uncertain about the strength of the US economy and the timing of future rate hikes. Global equities had their worst quarter since 2011 due to fears about China's economy and declining commodity prices. Locally, South Africa's GDP contracted more than expected and the outlook was revised lower. The rand depreciated sharply while domestic equities fell, with resources shares hit hardest by declining commodity prices.
The document discusses the challenges governments face in withdrawing fiscal and monetary stimulus programs as economic recovery takes hold. It notes that withdrawing support too soon could undermine the recovery, but waiting too long risks unsustainable debt levels and inflation. Most developed nations will likely pursue a gradual tightening over the next year or two. Asia is already beginning to tighten policies as some countries see strong growth return. Overall recovery in 2010 may slow as liquidity declines, but the foundations for rising asset prices remain in place, leaving the author cautiously optimistic.
Trekking markets & more with InvestrekkInves Trekk
The report presents a summary of the Indian market activity during the week ended 27 June 2021. It also provides some important insights about the global market trends and Indian Market outlook for the Week beginning 28 June 2021.
- Emerging economies face renewed financial turbulence as their currencies have depreciated sharply against the U.S. dollar in January 2014.
- The U.S. economy registered robust GDP growth in the fourth quarter of 2013, growing at an annualized rate of 3.2%.
- The economic performance of developing countries in the last quarter of 2013 was heterogeneous, with some facing currency pressures and others seeing stronger than expected growth.
Thiet ke Bao cao thuong nien - Vietcapital 2008Viết Nội Dung
The annual report summarizes Viet Capital Fund's performance in 2008, a difficult year for the fund and markets. The fund lost 57% in value compared to a 66% loss for the market index. While the fund outperformed the market, its net asset value fell to VND 418 billion by year-end. The fund increased its cash position from 22% to 44% over the year as it focused on capital preservation during the market turmoil. Top holdings were reduced in industries like real estate that were hit hard by the economic downturn. Going forward, the fund will emphasize quality companies and maintain a risk-aware strategy while seeking recovery opportunities.
The document provides an overview of macroeconomic trends in various regions including the US, Europe, China, and emerging markets. It also covers trends in several sectors. Key points:
- The US economy is in relatively good shape overall despite weakness in the oil industry. Unemployment is low, the housing market is strong, and capital investments are rising except in energy. However, the Fed is expected to delay raising rates until 2016 due to global growth concerns.
- The eurozone faces risks of deflation as inflation recently turned negative. Private consumption had driven growth but may decline if deflation persists. Core inflation remains positive and growth is expected to continue modestly.
- China's economy is slowing as the
The purpose of the Financial Stability Report is to provide an overview of the developments in Latvia's financial system and the systemic risks potentially threatening the stability of Latvia's financial system.
The Report includes several boxes on specific topics: development and structure of credit institution customer payments, credit institutions' search for new funding sources via web platforms, branchification, growing importance of the state support programme for house purchase, assessment of household access to credit, potential impact of Brexit on Latvia's financial sector as well as credit institutions' capacity to absorb potential liquidity, market and credit risk shocks.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The Low Interest Rate Dilemma for Corporate Investors Presentation 5-12 CCA V...Mike Betty
This document summarizes a presentation on corporate liquidity and investment challenges given by Mike Betty. It discusses how corporations have large cash piles due to economic uncertainty but are reluctant to invest or acquire due to ongoing risks. Key points driving caution include the political climate, Eurozone challenges, and uncertain economic growth. Regulations like Basel III may also impact corporate investing. The document outlines rationales for both continued caution and optimism in the economy. It identifies forecasting cash flows and preserving liquidity as major challenges for corporate treasurers.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
U.S. Health Insurance Exchanges — Moving ForwardEmily Jackson
This document provides an economic forecast and analysis of global economic conditions. It discusses how the global recovery is now 3 years old but celebrations are muted as growth has been slow. Growth is forecast to be 3.1% in 2012 and 3.6% in 2013. The deepening recession in the eurozone is a key factor slowing growth as debt strains continue in many countries. Recent EU agreements provide support but long-term solutions are still uncertain. Slowdowns in Europe are moderating growth in North America and Asia through reduced exports. China, India, and Brazil are taking steps to boost growth through interest rate cuts and fiscal measures. The US has potential for relative outperformance but growth is also slowing there.
This document provides a monthly market commentary for July 2015. It summarizes performance across various asset classes for the past month and year. Equities fell globally last month due to concerns over the Greek debt crisis and Chinese stock market correction. Credit spreads widened for all ratings. Nominal gilt yields rose but the yield curve shape remained unchanged. UK inflation proved short-lived as deflation ended, while real gilt yields rose in line with nominal yields.
1) While recent economic data from the UK has been positive, showing growth and falling unemployment, the UK economy still faces structural weaknesses that will dampen medium-term growth.
2) The UK has experienced decades of underinvestment and the private sector remains cautious, keeping investment levels well below pre-financial crisis levels.
3) The financial services sector, a key industry, also still faces weaknesses since the crisis and is limiting lending to the private sector.
4) External trade partners in Europe also remain weak, holding back UK growth.
The report provides an overview of macroeconomic trends and outlooks for various regions and sectors. For the domestic economy, while facing some headwinds, growth is expected to continue in 2016 driven by strong consumer spending. In Europe, recovery is expected to continue but at a slow pace due to global uncertainties. China is undergoing an economic transition and growth is projected to slow, posing risks globally. Emerging markets face challenges from China's slowdown and commodity price declines but conditions are projected to improve in 2016.
The U.S. government has pushed up against its federally mandated debt ceiling and cannot borrow more unless the ceiling is raised. What can we expect in the coming weeks? Our market update provides some insights.
The document provides an economic review and outlook covering various regions and countries. It discusses slowing global economic growth but reduced risks. Foreign direct investment declined globally in 2012 but some countries like Africa saw growth. The US Fed announced a possible tapering of quantitative easing which initially caused market selloffs but markets recovered. Eurozone risks were lowered by ECB actions though risks remain. Germany's economy slowed due to weakening Chinese demand. China's growth declined for two successive quarters due to weak overseas demand.
Ivo Pezzuto - "FED BITES THE BULLET - Implements First Rate Hike in Nearly a ...Dr. Ivo Pezzuto
The US Federal Reserve finally bites the bullet, increasing the
FFR – a key short-term interest rate – by quarter of a per cent.
With this, the regulator has clearly signaled that it might take
similar actions in future, if need arises, to take the economy
towards full recovery.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
This document provides an analysis of global economic growth prospects in the first quarter of 2015. It discusses that while many observers are pessimistic about global growth, the outlook is actually healthier than believed. Key points made include:
- Lower oil prices will provide a significant boost to global growth by acting as a tax cut for consumers and reallocating capital to other industries.
- The US recovery is strong, with robust GDP growth and improving labor market conditions adding to consumption.
- China will benefit from lower oil prices and its economy remains on track for healthy growth.
- The eurozone outlook is stronger than expected, aided by monetary easing and weaker euro supporting exports.
- Overall global growth is expected to be
Swedbank's Global Economic Outlook, 2010 March 18Swedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Export Development Canada's Global Economic Outlook, Fall 2019Stephen Tapp
The document provides an executive summary and global economic outlook from EDC Economics for Fall 2019. Key points include:
- Global growth is slowing significantly, with calls of an impending global recession growing. Forward indicators showed weakness emerging over 6 months ago.
- While business investment and exports have weakened significantly, consumer spending has remained strong, driven by low unemployment. This is an unusual divergence from typical recession patterns.
- The main ongoing trade disputes, especially US-China, are disrupting global trade and causing uncertainty that is weighing on business investment. Resolution of these disputes will determine whether growth rebounds or a recession occurs.
- The global economic outlook forecasts a growth slowdown in 2019 followed by a pickup in 2020-2021
The document summarizes an OECD report which finds that global economic growth remains weak due to low trade, investment, and commodity prices. While monetary policy has been accommodative, fiscal policy in major economies has been contractionary and the pace of structural reforms is insufficient. Collective fiscal action and faster structural reforms are needed to boost global demand and reduce financial stability risks from emerging markets' high debt loads and volatile capital flows.
The Fed kept interest rates unchanged in September due to concerns about slowing global growth and volatility in financial markets. This left investors uncertain about the strength of the US economy and the timing of future rate hikes. Global equities had their worst quarter since 2011 due to fears about China's economy and declining commodity prices. Locally, South Africa's GDP contracted more than expected and the outlook was revised lower. The rand depreciated sharply while domestic equities fell, with resources shares hit hardest by declining commodity prices.
The document discusses the challenges governments face in withdrawing fiscal and monetary stimulus programs as economic recovery takes hold. It notes that withdrawing support too soon could undermine the recovery, but waiting too long risks unsustainable debt levels and inflation. Most developed nations will likely pursue a gradual tightening over the next year or two. Asia is already beginning to tighten policies as some countries see strong growth return. Overall recovery in 2010 may slow as liquidity declines, but the foundations for rising asset prices remain in place, leaving the author cautiously optimistic.
Trekking markets & more with InvestrekkInves Trekk
The report presents a summary of the Indian market activity during the week ended 27 June 2021. It also provides some important insights about the global market trends and Indian Market outlook for the Week beginning 28 June 2021.
- Emerging economies face renewed financial turbulence as their currencies have depreciated sharply against the U.S. dollar in January 2014.
- The U.S. economy registered robust GDP growth in the fourth quarter of 2013, growing at an annualized rate of 3.2%.
- The economic performance of developing countries in the last quarter of 2013 was heterogeneous, with some facing currency pressures and others seeing stronger than expected growth.
Thiet ke Bao cao thuong nien - Vietcapital 2008Viết Nội Dung
The annual report summarizes Viet Capital Fund's performance in 2008, a difficult year for the fund and markets. The fund lost 57% in value compared to a 66% loss for the market index. While the fund outperformed the market, its net asset value fell to VND 418 billion by year-end. The fund increased its cash position from 22% to 44% over the year as it focused on capital preservation during the market turmoil. Top holdings were reduced in industries like real estate that were hit hard by the economic downturn. Going forward, the fund will emphasize quality companies and maintain a risk-aware strategy while seeking recovery opportunities.
The document provides an overview of macroeconomic trends in various regions including the US, Europe, China, and emerging markets. It also covers trends in several sectors. Key points:
- The US economy is in relatively good shape overall despite weakness in the oil industry. Unemployment is low, the housing market is strong, and capital investments are rising except in energy. However, the Fed is expected to delay raising rates until 2016 due to global growth concerns.
- The eurozone faces risks of deflation as inflation recently turned negative. Private consumption had driven growth but may decline if deflation persists. Core inflation remains positive and growth is expected to continue modestly.
- China's economy is slowing as the
The purpose of the Financial Stability Report is to provide an overview of the developments in Latvia's financial system and the systemic risks potentially threatening the stability of Latvia's financial system.
The Report includes several boxes on specific topics: development and structure of credit institution customer payments, credit institutions' search for new funding sources via web platforms, branchification, growing importance of the state support programme for house purchase, assessment of household access to credit, potential impact of Brexit on Latvia's financial sector as well as credit institutions' capacity to absorb potential liquidity, market and credit risk shocks.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The Low Interest Rate Dilemma for Corporate Investors Presentation 5-12 CCA V...Mike Betty
This document summarizes a presentation on corporate liquidity and investment challenges given by Mike Betty. It discusses how corporations have large cash piles due to economic uncertainty but are reluctant to invest or acquire due to ongoing risks. Key points driving caution include the political climate, Eurozone challenges, and uncertain economic growth. Regulations like Basel III may also impact corporate investing. The document outlines rationales for both continued caution and optimism in the economy. It identifies forecasting cash flows and preserving liquidity as major challenges for corporate treasurers.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
U.S. Health Insurance Exchanges — Moving ForwardEmily Jackson
This document provides an economic forecast and analysis of global economic conditions. It discusses how the global recovery is now 3 years old but celebrations are muted as growth has been slow. Growth is forecast to be 3.1% in 2012 and 3.6% in 2013. The deepening recession in the eurozone is a key factor slowing growth as debt strains continue in many countries. Recent EU agreements provide support but long-term solutions are still uncertain. Slowdowns in Europe are moderating growth in North America and Asia through reduced exports. China, India, and Brazil are taking steps to boost growth through interest rate cuts and fiscal measures. The US has potential for relative outperformance but growth is also slowing there.
This document provides a monthly market commentary for July 2015. It summarizes performance across various asset classes for the past month and year. Equities fell globally last month due to concerns over the Greek debt crisis and Chinese stock market correction. Credit spreads widened for all ratings. Nominal gilt yields rose but the yield curve shape remained unchanged. UK inflation proved short-lived as deflation ended, while real gilt yields rose in line with nominal yields.
1) While recent economic data from the UK has been positive, showing growth and falling unemployment, the UK economy still faces structural weaknesses that will dampen medium-term growth.
2) The UK has experienced decades of underinvestment and the private sector remains cautious, keeping investment levels well below pre-financial crisis levels.
3) The financial services sector, a key industry, also still faces weaknesses since the crisis and is limiting lending to the private sector.
4) External trade partners in Europe also remain weak, holding back UK growth.
The report provides an overview of macroeconomic trends and outlooks for various regions and sectors. For the domestic economy, while facing some headwinds, growth is expected to continue in 2016 driven by strong consumer spending. In Europe, recovery is expected to continue but at a slow pace due to global uncertainties. China is undergoing an economic transition and growth is projected to slow, posing risks globally. Emerging markets face challenges from China's slowdown and commodity price declines but conditions are projected to improve in 2016.
The U.S. government has pushed up against its federally mandated debt ceiling and cannot borrow more unless the ceiling is raised. What can we expect in the coming weeks? Our market update provides some insights.
The document provides an economic review and outlook covering various regions and countries. It discusses slowing global economic growth but reduced risks. Foreign direct investment declined globally in 2012 but some countries like Africa saw growth. The US Fed announced a possible tapering of quantitative easing which initially caused market selloffs but markets recovered. Eurozone risks were lowered by ECB actions though risks remain. Germany's economy slowed due to weakening Chinese demand. China's growth declined for two successive quarters due to weak overseas demand.
Ivo Pezzuto - "FED BITES THE BULLET - Implements First Rate Hike in Nearly a ...Dr. Ivo Pezzuto
The US Federal Reserve finally bites the bullet, increasing the
FFR – a key short-term interest rate – by quarter of a per cent.
With this, the regulator has clearly signaled that it might take
similar actions in future, if need arises, to take the economy
towards full recovery.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
This document provides an analysis of global economic growth prospects in the first quarter of 2015. It discusses that while many observers are pessimistic about global growth, the outlook is actually healthier than believed. Key points made include:
- Lower oil prices will provide a significant boost to global growth by acting as a tax cut for consumers and reallocating capital to other industries.
- The US recovery is strong, with robust GDP growth and improving labor market conditions adding to consumption.
- China will benefit from lower oil prices and its economy remains on track for healthy growth.
- The eurozone outlook is stronger than expected, aided by monetary easing and weaker euro supporting exports.
- Overall global growth is expected to be
Swedbank's Global Economic Outlook, 2010 March 18Swedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
INTERNATIONAL MONETARY FUND
Abstract
The U.S. financial and economic crisis has had severe global repercussions. The run-up to the crisis involved a substantial and widespread underestimation of risks—especially in housing—and growing leverage and liquidity mismatches, in particular through off-balance-sheet vehicles and non-bank entities in less-regulated areas. Against a backdrop of easy global financial conditions, this dynamic fed an unsustainable buildup of financial imbalances, above all in housing markets. The sharp decline in housing prices that started in 2007 weakened several systemically important financial institutions, culminating in the collapse of Lehman Brothers, and revealing major weaknesses in the U.S. regulatory and resolution frameworks. This was followed by the worst global financial panic since the Great Depression, with extreme strains in a broad range of markets, volatility in capital flows and exchange rates, and a cascade of systemic events. Economic activity collapsed globally, with trade contracting sharply and advanced economies as a group registering the steepest decline in production in the postwar period. Emerging markets economies also experienced intense pressure, amid retrenching trade and tighter international financing conditions.
I. Overview ; Outlook and Risks
1. Recent data suggest that the sharp fall in output may now be ending, although economic activity remains weak. Economic indicators point to a decelerating rate of deterioration, particularly in labor and housing markets, both of which are key to economic recovery and financial stability. In tandem, financial conditions have noticeably improved, with narrowing interest-rate spreads and growing confidence in financial stability in the wake of measures deployed by the Administration, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve. That said, both financial and economic indicators remain at stressed or weak levels by historical standards.
2. 4. The staff's outlook remains for a gradual recovery, consistent with past international experience of financial and housing market crises. The combination of financial strains and ongoing adjustments in the housing and labor markets is expected to restrain growth for some time, with a solid recovery projected to emerge only in mid-2010. Against this background, GDP is expected to contract by 2½ percent in 2009, followed by a modest ¾ percent expansion in 2010 on a year-average basis (on a Q4-over-Q4 basis, -1 ½ percent in 2009 and 1 ¾ percent in 2010). Meanwhile, growing economic slack—with unemployment peaking at close to 10 percent in 2010—would push core inflation to very low levels, with the headline CPI expected to decrease by ½ percent in 2009 and increase by 1 percent in 2010. rates, on concerns about fiscal sustainability; and rising corporate distress. Much will also depend on developments abroad, including progress made in strengthening financial institutions and markets.
II. Near-term stabilization
1. Macroeconomic policies are providing welcome support to demand. The fiscal stimulus—well targeted, timely, diversified, and sizeable—is projected to boost annual GDP growth by 1 percent in 2009 and ¼ percent in 2010. This is being appropriately complemented by a highly expansionary monetary stance and “credit easing” measures that are also relieving financial strains. Continued clear communication on the near-term outlook will be essential to anchor inflation expectations, given the prevailing uncertainty. If activity proves weaker than expected, the Fed could undertake additional credit easing, and further strengthen its commitment to maintain a highly accommodative stance. If necessary, additional fiscal stimulus could also be considered, focused on fast-acting measures, although this would need to be complemented by a concomitantly stronger medium-term adjustment.
2. Steps to s
- Global financial turmoil amid expectations that major central banks will taper quantitative easing programs, particularly in the US
- Significant capital outflows and sharp depreciation of currencies in developing countries as a result, while bond yields increased in developed nations
- Large emerging economies like Brazil, India, and Russia continue to face domestic economic vulnerabilities and slowing growth
- Western Europe shows signs of stabilizing but economic activity remains at low levels with high unemployment
Here are the key points from the Central Bank section:
- The central bank has increased the public sector credit growth ceiling to 10.9% for the second half of the fiscal year, up from its previous projection of 8.5%, in light of higher growth in the first half.
- Interest rates on savings certificates offered by the central bank (around 12%) remain significantly higher than deposit rates offered by commercial banks (6-7%).
- The central bank's monetary policy statement projected GDP growth will be between 7.5-8.2% for fiscal year 2018-19.
- A priority is bringing down default loans by ensuring better corporate governance in the financial sector.
Informe - La economía global entra en aguas turbulentasIgnacio Jimenez
The global economy has seen sluggish growth in 2015 as emerging markets struggle. Global growth is projected to be just 2.5% in 2015 and modestly increase to 2.9% in 2016, below historical averages. Advanced economies are doing relatively well, while emerging markets face headwinds from falling commodity prices, China's economic slowdown, and anticipated higher US interest rates. Global trade growth has also been disappointing and is expected to be around 1% in 2015 before a slight pickup in 2016. China now accounts for 18% of global GDP, making its economic performance a dominant factor for global growth.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
This document summarizes the Chief Economist's discussion of policy challenges facing the global economy in areas such as monetary policy, fiscal policy, and growth. It notes that while policymakers have successfully managed the crisis, challenges remain in areas like withdrawing monetary stimulus, reducing government debt, and rebalancing global growth. Overall economic growth is expected to be slow over the next few years. Coordinated, realistic policies across many levels will be needed to avoid future crises and promote sustainable growth.
The document summarizes a report by The Economist Intelligence Unit on the global economic outlook for Q4 2020. It finds that advanced economies will enter a "new normal" characterized by slow growth, low inflation, and high debt due to the fiscal stimulus measures enacted during the COVID-19 pandemic. Central banks have taken on the new role of directly financing government spending, and low interest rates mean debt servicing costs are negligible. As a result, debt piles may simply disappear over time if growth outpaces interest rates. However, this situation also carries long-term risks for productivity, inflation, and financial stability.
EY Global Market Outlook 2016 - Trends in Real Estate Private EquityThorsten Lederer 托尔斯滕
We are heading into new economic territory as 2015 draws to a close, and with this comes a new environment for real estate fund managers that have become accustomed to low interest rates and rising values. Many fund managers are lightly tapping the brakes given competition for deals, an abundance of debt and equity capital, and an awareness of the typical duration of a real estate bull market. What does this mean for the industry? Read more in this EY publication.
Etude PwC Global Economy Watch (fév. 2015)PwC France
http://bit.ly/GlobalEconomyWatchfev15-CP
Selon la dernière étude « Global Economy Watch » du cabinet d’audit et de conseil PwC, les économies importatrices nettes de pétrole, telles que la zone Euro, les États-Unis et le Japon devraient être les grandes gagnantes de la chute du prix du pétrole au cours de l’année 2015. La zone Euro devrait également bénéficier à court terme du programme d’assouplissement quantitatif annoncé par la BCE.
1) The document calls for a coordinated fiscal stimulus package across Eurozone countries to combat recession, arguing the current individual country responses have been too weak and uncoordinated. It recommends a minimum 2% of GDP stimulus that is sustained until economies recover.
2) Monetary policy actions by the ECB have not been enough on their own to sustain the Eurozone economy, and now need to be supported by strong fiscal policy actions. However, the Stability and Growth Pact prohibits automatic fiscal stabilizers from working as needed.
3) For stimulus packages to be effective, they should focus on public spending that directly increases aggregate demand and employment, such as infrastructure investment, rather than broad-based tax cuts. Co
This presentation considers the possibility of a second recession in the face of the ongoing European Debt Crisis, misguided attempts to address the crisis through austerity and struggling world economies. It also reflects on the impact of the probable break-up of EU’s currency union, measures to avert the scenario and vulnerable positions of the economies of the USA, China and India to more trouble in the Euro-zone.
The doomsday scenario has been summarized by Martin Wolf of Financial Times (May 17, 2012):
“The mechanisms at work would be powerful: bank runs; the imposition of (illegal) exchange controls; legal uncertainties; asset price collapses; unpredictable shifts in balance sheets; freezing of the financial system; disruption of central banking; collapse in spending and trade; and enormous shifts in the exchange rates of new currencies.
.
The document provides an outlook for 2016, summarizing that:
1) China has committed to ensuring 7% growth for the immediate future through government intervention, but rebalancing away from investment is necessary long-term which will slow growth rates.
2) In Europe, GDP growth has accelerated from under 1% to 1.6% since late 2014, supported by ECB monetary easing expanding credit.
3) In the US, growth in construction employment and spending is contributing to a 5% rise in personal consumption and will likely continue supporting the economy in 2016.
What recent and past actions have Canada and the US taken to counter.pdfmeejuhaszjasmynspe52
What recent and past actions have Canada and the US taken to counteract their exchange rates
with the economy in such distress over the past 10 years?
Solution
Since 2007, the world has experienced a period of severe financial stress, not seen since the time
of the Great Depression. This crisis started with the collapse of the subprime residential
mortgage market in the United States and spread to the rest of the world through exposure to
U.S. real estate assets, often in the form of complex financial derivatives, and a collapse in global
trade. Many countries were significantly affected by these adverse shocks, causing systemic
banking crises in a number of countries, despite extraordinary policy interventions. Systemic
banking crises are disruptive events not only to financial systems but to the economy as a whole.
Such crises are not specific to the recent past or specific countries – almost no country has
avoided the experience and some have had multiple banking crises. While the banking crises of
the past have differed in terms of underlying causes, triggers, and economic impact, they share
many commonalities. Banking crises are often preceded by prolonged periods of high credit
growth and are often associated with large imbalances in the balance sheets of the private sector,
such as maturity mismatches or exchange rate risk, that ultimately translate into credit risk for
the banking sector.
Crisis management starts with the containment of liquidity pressures through liquidity support,
guarantees on bank liabilities, deposit freezes, or bank holidays. This containment phase is
followed by a resolution phase during which typically a broad range of measures (such as capital
injections, asset purchases, and guarantees) are taken to restructure banks and reignite economic
growth. It is intrinsically difficult to compare the success of crisis resolution policies given
differences across countries and time in the size of the initial shock to the financial system, the
size of the financial system, the quality of institutions, and the intensity and scope of policy
interventions. With this caveat we now compare policy responses during the recent crisis episode
with those of the past. The policy responses during the 2007-2009 crises episodes were broadly
similar to those used in the past. First, liquidity pressures were contained through liquidity
support and guarantees on bank liabilities. Like the crises of the past, during which bank
holidays and deposit freezes have rarely been used as containment policies, we have no records
of the use of bank holidays during the recent wave of crises, while a deposit freeze was used only
in the case of Latvia for deposits in Parex Bank. On the resolution side, a wide array of
instruments was used this time, including asset purchases, asset guarantees, and equity injections.
All these measures have been used in the past, but this time around they seem to have been put in
place quicker (for detailed informatio.
Brian Nash presented on the uneven global recovery. The presentation discussed the global economic outlook, including expectations for stronger US growth led by consumption, moderate growth in China, and challenges in Europe. Central banks are becoming more aggressive in their monetary policies, with the ECB beginning a large quantitative easing program. Geopolitical risks and diverging monetary policies pose risks to the global economy in 2015.
This document provides an overview and summary of the UNCTAD Trade and Development Report for 2013. It finds that five years after the global financial crisis, the world economy remains in a state of disarray with slow growth. Developed countries are expected to grow around 1% while developing countries may grow around 5%. International trade has slowed significantly and global recovery is uncertain as fiscal austerity in many countries is adding deflationary pressure instead of strengthening demand. The crisis also seems to be of a different nature than past recessions, requiring policies focused on boosting domestic demand rather than restoring financial market confidence.
OVERVIEW Five years after the onset of the global financial crisis the world economy remains in a state of disarray. Strong expansionary monetary policies in the major developed economies have not succeeded in fostering credit creation and strengthening aggregate demand. Fiscal austerity and wage compression in many developed countries are further darkening the outlook, not only for the short term, but also for the medium term. The burden of adjustment of the global imbalances that contributed to the outbreak of the financial crisis remains with the deficit countries, thus strengthening deflationary forces in the world economy. The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all. In 2008 and 2009, policymakers of several economically powerful countries had called for urgent reforms of the international monetary and financial system. However, since then, the momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain. Some developing and transition economies have been able to mitigate the impact of the financial and economic crises in the developed countries by means of expansionary macroeconomic policies. But with the effects of such a response petering out and the external economic environment showing few signs of improvement, these economies are struggling to regain their growth momentum. Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States.
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Ivo Pezzuto - UNITED STATES: IS A SLOWDOWN IN THE OFFING? (The Global Analyst Magazine July 2015 Issue)
1. The Global Analyst | JULY 201544 |
INTERNATIONAL
UNITED STATES
Is a Slowdown in the Offing?
In the absence of potential tail risk events/severe shocks and externalities, the
rate of GDP growth in the US should eventually rebound in the coming quarters.
- Dr. IVO PEZZUTO, Global Markets Analyst, Management Consultant,
Economics and Management Professor
Author of the Book “Predictable and Avoidable” ISTUD Business School and
Catholic University of the Sacred Heart. Milan, Italy
2. 45The Global Analyst | JULY 2015 |
T
he second estimate of first-quarter of 2015
GDP of the US economy shrank at a 0.7 per
cent annualized rate. This contraction proved
to be a bit less than expected (i.e. 0.9 per cent
on an annualized basis to start 2015). The ini-
tial estimate of Q1 2015 GDP, released April 29, showed
the economy grew 0.2 per cent to start the year, but well
below then-consensus expectations for a 1 per cent in-
crease. Industrial production has been affected by a
strong US dollar and sluggish global growth, however,
business confidence and consumer confidence indicators
and other indicators seem to suggest that the surprise Q1
contraction will not last much longer despite the fragile
US and Eurozone recovery.
• A number of factors seem to have contributed to the
Q1 2015 GDP contraction, among these notable ones
are:
• The harsh winter conditions;
• Dockers’ strikes all across the West Coast;
• Increased trade deficit due to a stronger dollar which
has allowed American consumers to purchase a larg-
er amount of the depreciated foreign-made goods;
• Manufacturing has been undermined by the buoyant
dollar, whose 12.1 per cent appreciation against the
currencies of the United States’ main trading part-
ners since last June has eroded overseas profits of
multinational companies. Cheap oil and a strong
dollar, while beneficial to consumers, are putting se-
rious pressure on manufacturers.
• Lower increase in domestic stockpiles of goods. Do-
mestic inventories decreased due to a pickup in busi-
ness activity, the results of which are expected to re-
veal themselves in Q2;
• A slightly weaker-than-expected consumer spending;
• Decreased investment in the energy sector following
the drop in fuel prices (lower crude prices triggered
a partial freeze in the shale boom). Capital spend-
ing in oil field exploration and drilling slumped 48.6
per cent in Q1, the greatest decline since 2009. The
stronger dollar and reduced capex spending by oil-
field firms combined with a harsh winter and softer
global demand contributed to slow U.S. growth at
the start of the year.
• Slowing exports, non-residential fixed income invest-
ment and local government spending
• Corporate profits also fell in the first quarter
Nevertheless, in the absence of potential tail risk events/
severe shocks and externalities (i.e., “Grexit” or poten-
tial Eurozone political and social tensions, further geo-
political issues related to Russia/Ukraine, or potential
crises affecting the Emerging Markets, etc.), the rate of
GDP growth in the US should eventually rebound in the
coming quarters. An improving labour market is among
reasons consumers may be more willing to spend in the
next quarters if the economy continues to improve and
there will be no negative impact of a potential rate hike
by the Federal Reserve.
A revival is not far off, though
Gallup’s US Economic Confidence Index registered at -9
for the week ending June 7, the sixth straight week the
index has been at or below -5. (Gallup 2015). Based on the
latest forecast on the US Economy by Oxford Economics,
it seems quite unlikely that the Federal Reserve will com-
mit itself in June 2015 to a specific rate lift-off date (the
timing and pace of rates lift-off; Fed in its meeting on June
17 did not press for rate hike while sounding cautionary
about GDP growth), but consumer spending is expected
to strengthen through the rest of the year as faster wage
growth, lower oil prices, and upbeat confidence lead
consumers to spend more. Furthermore, increased wage
growth, historically high affordability, and a slow release
of pent-up demand are expected to underpin a stronger
pace of activity in the housing sector. Lower oil prices, a
stronger dollar, and slow global growth will continue to
drag on business investment, but in the coming quarters
the impact of factors will diminish and domestic activity
will probably strengthen. Lower energy prices will con-
tinue to weigh on headline inflation, while core inflation
will remain well-anchored.
With real GDP growth averaging 2 per cent towards the
end of the year, the unemployment rate hovering close to
5 per cent and inflation moving back toward 2 per cent,
it is likely to expect a potential rate hike by the Federal
Reserve in September 2015 or December 2015 (policy nor-
malization), in the absence of major risk events/severe
global shocks, externalities, slow recovery and subdued
inflation, or lower productivity growth.
Needed a ‘New Deal’ to end the Greece Crisis
Financial markets, however, can be quite volatile when
hit by fears of potential economic and financial crises
(i.e., “Grexit” - S&P has recently downgraded Greece to
CCC, with negative outlook and IMF payment has been
deferred), potential contagion risks, or geo-political ten-
sions in various areas of the world. All these elements
might have a sudden impact on the emotional reactions
of investors who might turn immediately risk averse
due to the rising uncertainty, markets’ interconnected-
ness and complexity. ECB President Mario Draghi said
in April 2015 that “the euro area is better equipped than
it had been in the past to deal with a new Greek crisis,
but warned of ‘uncharted waters’ if the situation were to
deteriorate badly.” No one can fully predict the unin-
tended geo-political, economic and social consequences
of a potential “Grexit” scenario.
In the last six months, that is, since the beginning of the
new Greek crisis in 2015, we have not yet seen a signifi-
cant emotional or panic reaction of international inves-
tors about a potential “Grexit” event (Exit of Greece from
the Eurozone). This apparent calm reaction of the finan-
cial markets can be probably related to the higher confi-
dence investors have in Greece’s major creditors’ ability
Is a Slowdown in the Offing?
3. The Global Analyst | JULY 201546 |
(i.e. IMF, ECB, and EU Countries) to
figure out a sustainable agreement to
keep Greece in the Eurozone at any
cost, or at least, to be able to mitigate
the negative effects of a potential
“Grexit” event. It could be also due
to the fact that the international pri-
vate financial institutions currently
have only a marginal exposure to the
Greek debt.
Whatever will be the outcome of
the current Greek crisis, in order to
avoid in the future additional poten-
tial systemic risks (i.e. liquidity, sol-
vency, banking, political crises) and
potential spillorver effects, and to
revamp long-term economic growth
and prosperity in the Eurozone, it is
crucial to reach an agreement to pre-
vent the further deterioration of the
economic and financial situation in
the Country and to keep Greece sol-
vent in the long term. Furthermore,
It would be also beneficial for the
European leaders to envision and
implement in the coming years (the
sooner, the better), a stronger and
more cohesive integration process
and a new deal (i.e., revision of the
Eurozone Treaties) in order to mini-
mize the risks of potential durable
spillover effects to the rest of the euro
zone or global economy in case of a
potential default of a member state.
The new deal should probably in-
clude the following ambitious and
daring policy decisions (political
courage) while trying to avoid any
potential risk related to moral haz-
ard:
• Allow a more pro-active use of
the crisis resolution mechanism/
fund and of the regional institu-
tions and facilties to prevent cri-
ses (i.e. ECB, European Stability
Mechanism, European Invest-
ment Bank, or the creation of a
European Monetary Fund), i.e.,
before the default occurs;
• Assure proper capital controls
policies and bail-in regime for
banks’ crisis resolution and loss
absorption
• Assure full risk sharing mecha-
nisms among member states for
QE programs and a common fis-
cal backstop for solvency/sover-
eign debt crises;
• Assure full integration in the
Euro zone of the fiscal (i.e. the
assurance of a fiscal backstop
and fiscal transfers), economic,
monetary, banking, capital mar-
kets, financial, and political sys-
tems;
• Introduce a single deposit-insur-
ance mechanism covering all
banks in the Union;
• Assure adequate powers for the
single supervisory mechanism
in the Euro zone and effective
and forward looking macropru-
dential regulation of all financial
institutions (i,e. banks, shadow
banking, investment funds,
hedge funds, asset management
firms, and insurance firms), as
well as, harmonized bankruptcy
laws, accounting rules, and fiscal
criteria in the region, and a sin-
gle and fully empowered crisis
resolution authority;
• Implement a common mecha-
nism to support job flexibility in
countries with high unemploy-
ment;
• Introduce clear policies and res-
olution criteria for managing
bank crises, banks recapitaliza-
tions, collateral haircuts policy,
balance of payments imbalanc-
es, asymmetric shocks, and debt
restructuring solutions in case
of fiscal and debt restructuring/
solvency crises. Thus, it is im-
portant to allow member states
to restructure their debt.
• Reduce the “revolving doors”
practices between regulators,
supervisory authorities and fi-
nancial institutions introducing
policies that a ban the “common
practice” for a number of years
(i.e. 5 years or more)
• Monitor that the ultra-accommo-
dative monetary policies do not
create perverse incentives for the
corporate world to pursue mas-
sive leverage strategies issuing
unprecedented levels of corpo-
rate bonds. This practice is facili-
tated by the excess of liquidity
and cheap funding guaranteed
by the central banks, and allows
corporations to lever up (e.g.
higher leverage) their balance
sheets and to conduct stockhold-
er-friendly actions, like buying
back stock or paying dividends.
As a result of these strategies, the
corporate world can artificially
increase the profitability of their
businesses (and their earnings
per share) for common stock-
holders, but without changing
also the fundamentals of their
businesses through investments
in capital expenditures.
• Differently from the stock mar-
ket, the corporate bond market,
in general, is far less liquid and
Is a Slowdown in the Offing?
4. 47The Global Analyst | JULY 2015 |
tends to perform quite poorly
during periods of rising interest
rates and, in general, its securi-
ties are not traded in more liquid
exchanges, as stocks are, but they
are traded mostly over the coun-
ter in illiquid markets. As stated
by Economist Nouriel Roubini,
“private and public debts be-
fore and after the financial cri-
sis – are held in open-ended
funds that allow investors to exit
overnight.” (Roubini, 2015)Prof.
Roubini also added the follow-
ing: “This combination of macro
liquidity and market illiquidity
is a time bomb. So far, it has led
only to volatile flash crashes and
sudden changes in bond yields
and stock prices. But, over time,
the longer central banks create
liquidity to suppress short-run
volatility, the more they will
feed price bubbles in equity,
bond, and other asset markets.
As more investors pile into over-
valued, increasingly illiquid as-
sets – such as bonds – the risk
of a long-term crash increases.”
(Roubini, 2015)
• Furthermore, as I have stated in
an interview with the Brazilian
news agency, Agência Estado, in
2011, “a generalized approach of
contractionary fiscal policies in
the peripheral European coun-
tries, based only on tough na-
tional austerity programs; rigid
budget discipline, fiscal consoli-
dation, state-owned assets and
shareholdings’ dismissals/priva-
tizations, and higher taxation;
with limited or no commitment
also to contra-cyclical measures
towards growth (i.e. invest-
ments on innovation, educa-
tion, infrastructures, tax breaks,
tax incentives, and tax wedge
reduction); effective structural
reforms, spending cuts of non-
productive expenditures (to fill
the ‘competitive gap’ and to re-
vamp productivity and expecta-
tions), and some degree of flex-
ibility to reach budget and fiscal
consolidation targets during
adverse economic cycles, would
eventually turn a bad situation
into a worse one (self-defeating
strategy) or prolonged recession,
or stagnation, or slow and anae-
mic, and uneven growth (Pez-
zuto 2011).
The QE program introduced in the
Eurozone in 2015 is very important
to help restore confidence and to af-
fect, over the years, inflation expec-
tations, but it might not be sufficient
to guarantee long-term economic
growth and higher employment un-
less it is also combined with non-
conventional and ultra-aggressive
economic policies, fiscal policies/in-
centives, industrial and investment
plans, innovation programs, and
radical structural reforms affecting
private firms’ and public adminis-
tration productivity, labour market,
welfare systems, free market compe-
tition, performance-based compen-
sation, meritocracy, etc.
As I have reported in my paper of
September 2014 titled, “Predictable
and Avoidable: What’s Next?”, “The
peripheral Eurozone countries need
to focus their most critical resources
on long-term development projects,
strategic industries, infrastructures,
new economic and business models,
and innovative cultural and mana-
gerial paradigms in order to gain
new competitive advantages and to
achieve global competitiveness. The
shift toward a more integrated and
interdependent world economy,
with falling barriers to cross-border
trade and the progressive globaliza-
tion of markets and consumer tastes,
are rapidly forcing western econo-
mies to rethink the sustainability of
their economic and social models.
Thus, the so-called advanced econo-
mies, and in particular the Eurozone
countries, need to pursue their chal-
lenging goals of economic revival
while trying at the same time to
avoid generating the following nega-
tive consequences.
• Destabilizing social cohesion and
trust among member states;
• Decreasing consumer and busi-
ness confidence;
• Increasing distrust in national
and regional political and eco-
nomic leaders;
• Rising levels of inequality and so-
cial exclusion.” (Pezzuto, 2014)
Challenging global environ-
ment
There is no doubt that we are cur-
rently facing a challenging global
economic cycle. Recently, the IMF
revised downward global growth,
while it also cautioned the Federal
Reserve against raising interest rates
Is a Slowdown in the Offing?
Slowdown Blues
5. The Global Analyst | JULY 201548 |
in 2015 and suggested it to postpone
rate lift-off to First Half of 2016. The
IMF has reported that the dollar is
“moderately overvalued” and a fur-
ther marked appreciation would be
“harmful”. The IMF has also stated:
“We still believe that the underpin-
nings for continued expansion are
in place,” and that “The inflation
rate is not progressing at a rate that
would warrant, without risk (i.e.
high volatility in the markets, correc-
tions, potential spillover effects on
the emerging markets, flash crash),
a rate hike in the next few months.
That means the Fed might decide to
wait until early 2016, even if according
to Christine Lagarde, IMF’s Managing
Director, there’s a risk of “slight over-
inflation” relative to the central bank’s
2 per cent target. A stronger dollar,
declining oil investment and a West
Coast port strike in the first quarter
will pull down U.S. growth to 2 per
cent this year, according to the IMF.
Furthermore, she stated that the Fed’s
policy-setting committee “should re-
main data dependent and defer its
first increase in policy rates until there
are greater signs of wage or price in-
flation than are currently evident.”
Beware of De-coupling risk!
Although the US economy seems to
be in a much better shape than most
other ones, it cannot be considered
in total decoupling from the rest of
the world despite its unique innova-
tive and entrepreneurial spirit and
its numerous competitive advan-
tages and comparative advantages
versus other countries. The current
global slowdown and the numerous
externalities and potential economic,
financial, and geo-political risks aris-
ing around the world might have an
important impact even on the US
economy, and mostly on the busi-
ness interests of multinational firms
operating on a global scale.
The US economy, as some econo-
mists fear, might be bracing for one
of the worst first-half performances
since 2011, but even if this will be
confirmed by the data, would be
probably triggered mainly by exter-
nalities, global slowdown, high vola-
tility, and structural problems.
The major challenges that the US
probably faces in its effort to revive its
economy, like most of the advanced
countries, include the long-term wel-
fare system sustainability (i.e. pen-
sion/retirement plans), its ability to
balance sustained economic growth
and the threat of shadow banking
expansion, a generalized reduced
trust in the financial institutions by
the local consumers and investors as
a consequence of the aftermath of the
2007 – 2009 financial crisis, the ability
to reduce inequality and strengthen
the economic prosperity and oppor-
tunities for its the middle class and
the less educated population, which
has been severely penalized by badly
planned globalization/unfair global
competition, before and after the fi-
nancial crisis, (i.e. “no enforceable
Is a Slowdown in the Offing?
“The appropriate policy
decision is going to be data
dependent. Our opinions
will shift as the data evolves
… there are a set of risks
all of us need to weigh —
in judging the appropriate
time. Waiting too long
for normalization can risk
overshooting our inflation
(targets), and beginning too
early could derail a recovery
we have tried to achieve for
a long time.”
JANET YELLEN, US Fed Chair
with the ability to establish new in-
ternational trade agreements to cre-
ate a plain field competition that
might further strengthen its global
competitiveness and on the ability
to encourage further expansion of
internal consumption, investments,
markets’ liberalizations, and innova-
tive business models and global val-
ue chains in the fast-growing emerg-
ing markets
Another potential risk for the US
Economy could be related to the Fed-
eral Reserve rate hike if not properly
managed, although they are very
much aware of this potential risk.
Some analysts say that when the
Fed starts raising interest rates, with
bond prices falling, banks will be left
with depreciating assets (Treasuries)
and stuck with low yielding long-
term loans. As the ‘rug is pulled from
under the banks,’ the housing mar-
ket might collapse as well, as stated
by Peter Schiff. In fact, if monetary
policy normalization in the USA is
not completed smoothly and care-
fully, in spite of improved corpo-
rate profits and stock market record
highs, there could be the potential
risk of a strong correction in the
markets, since the prices of various
asset classes have been “artificially”
inflated since 2008 by seven years of
consecutive close to zero percent Fed
Funds rates and three rounds of mas-
sive QEs (Pezzuto, 2013). Overall,
there might be challenges along the
way, but I believe that the US econ-
omy will remain a leading competi-
tive player in the global arena and an
influential and powerful trendsetter
and benchmark for all economies.
TGA
strong labour
standards, no en-
vironmental stan-
dards, low cost
productions ar-
eas, child labour,
etc.”), as Stated
by President
Barack Obama.
One of the key
challenges for the
US will be related