Top Economic Reports
April 30, 2013

By Global Economic Team|

Economics and Strategy: Deciphering Draghi: What's new: Like many investors, we are still somewhat bemused by the noticeable shift in tone at the last ECB press conference. In this note, we benchmark the shift against the language ahead of past ECB rate cuts and discuss possible economic, financial and political motivations for the shift. On balance, we conclude that our previous outside scenario of an ECB refi rate cut in one of the next two meetings has now become our base case, and we now expect a 25bp rate cut by June. Elga Bartsch

China Economics: Too early to turn pessimistic: Our latest policy trip to Beijing showed a mixed picture of the macro backdrop. Good news: 1Q growth data was likely understated due to some temporary shocks (e.g. late Lunar New Year and the leap year) and biased by statistical sampling changes. In addition, our investigation seems to suggest that the adverse impact of the recent banking regulation and property policy tightening measures on liquidity and real estate investment will likely remain limited. Helen Qiao

India Economics - Macro Indicators Chartbook: Macro Stability Indicators Beginning to Improve: This monthly publication presents all the key macro indicators for the Indian economy, which we believe will provide a comprehensive macro health check. This chartbook summarizes the trends in key indicators for growth, external sectors, inflation, monetary conditions, and public finance. Chetan K Ahya

Asia/Pacific Economics:  Growth Entering A Soft Patch: This monthly publication contains all the key indicators for tracking economic growth conditions in the Asia/Pacific region. We hope this publication will provide a one-stop shop for investors to assess current economic growth developments. Within this publication, we provide data on industrial production and all the items within the GDP by expenditure approach, namely, consumption, investment, government spending and net exports. Chetan Ahya

Italy and the Political Cliff (Part V): Paying the Bills:

• With the nomination of Enrico Letta as Italy's new prime minister, prospects of overcoming the political stalemate are rising. This is a positive development, in our view, and might perhaps mark the beginning of a less volatile period in Italian politics.

• But whether it paves the way toward paying the many ‘policy arrears' that are long overdue remains to be seen. While certain institutional reforms seem likely to some degree, there's still considerable uncertainty on whether there's enough support for broader reforms, given parliamentary fragmentation.

• In the near term, the good news is that other types of arrears - i.e., those accumulated by the public administration toward its suppliers - will be paid. The effect on GDP growth is subject to considerable uncertainty, but at the very least this plan could give respite to the corporate sector.  Daniele Antonucci

European Eco Weekly:  Falling Business Sentiment: Euro Area: Apart from the Italian political situation, the main focus this week will be on some key survey data, after ECB President Mario Draghi, at the April meeting of the Governing Council, and Bundesbank President Jens Weidmann, in an interview last week, signalled that the ECB will monitor very closely all incoming data and may adjust its interest rates accordingly. Tomasz Pietrzak.

Brazil, Venezuela & Mexico: Doves, Tips and Twists - Week Ahead in Latin America:

Brazil: A Dovish Hike: When is an interest rate hike dovish? When the authorities move by less than the market is expecting and seem hesitant to even commit to a hike. Confused? There is one thing that we feel comfortable claiming: the magnitude of the coming hikes is unlikely to be sufficient to tackle Brazil's inflation challenge. Arthur Carvalho

Venezuela: Towards A Tipping Point?. Venezuela has a new president, but it has the same old problems as macro conditions worsen and the arrival of a Tipping Point appears to be approaching. Daniel Volberg

Mexico: Inflation Twists and Turns. While Mexico's core measures remain low, headline inflation has been on a rollercoaster ride. A new weighting set to be announced this week should help to reduce some of the gap between headline and core down the road. Luis Arcentales