Top Economic Reports
August 07, 2013
By Global Economics Team|
The Global Macro Analyst: Why Have Markets Forced EM ‘Tightening' This Time? When the Great Financial Crisis hit EM currencies in 2008/09, EM central banks were able to defend their currencies while cutting policy rates to defend domestic growth. Why then have some EM central banks been forced by markets into hiking rates in the recent sell-off when the shock was far smaller? Manoj V Pradhan.
Sunday Start: What Next in the Global Economy (July 28, 2013): All of my professional life, I've been fascinated by the ups and downs of the business cycle, economic policy actions, and financial markets, with all their regularities, vagaries, and irregularities. I've been poring over the data and indicators that depict economic activity, trying to decipher, track, explain, and predict expansions (call them ‘day'), recessions (‘night') and the grey, fuzzy areas in-between (‘twilight'). I've been trying to make connections between economic activity, monetary and fiscal policies and financial markets, including the many feedback loops involved. But this shouldn't be news to you - it's what Sunday Start is mostly about. Joachim W Fels.
Indonesia Economics: Asia Insight: Why The Next Election Is More Important Than the Last: Can Indonesia build on foundations already laid? The 2009 elections were important because of what they meant for political stability and the longevity of the institution-building process. Without them, Indonesia's structural story would have fallen by the wayside. The 2014 elections matter even more, not least because these foundation blocks remain important, but also because although investors believe the structural story remains intact, we think it faces challenges from risks of a further China slowdown and the collateral impact on commodity prices. Therefore, we believe there is an increased urgency to undertake "structural reform 2.0" to offset such global negatives - without it, Indonesia could face lower growth and macro stability risks. Deyi Tan.
European Eco Weekly: Central Banks on hold: Euro Area: The main focus of the week will be on the August ECB meeting. We expect the ECB to leave interest rates unchanged and would view a refi rate cut in September as more likely. Given the ECB's official easing bias, we would not completely rule out a rate cut at the upcoming meeting though. In our view, incoming data is consistent with a stagnating euro area economy in 3Q. As such the improvements in business sentiment should not stand in the way of further ECB easing. In addition, both M3 money supply and the 2Q bank lending survey underscored the continued decline in credit availability to the corporate sector. HICP inflation has also likely peaked now and should start to ease materially in the coming months. However, we believe that the Council might prefer to wait another month before pulling the trigger on rates again. This is because they might want to have more visibility on the likely trajectory for the business cycle in 2H, the updated set of staff projections and on whether the tightening in financial conditions is sustained. What's more, we will be watching closely the decision on the next sub-tranche for Greece and the confidence vote in Portugal. On the data front, we expect inflation in the euro area to remain unchanged in July. Tomasz M Pietrzak.
Japan Economics: Quick Comment: Consumption Tax Time Profile Likely to Change: The News: On Saturday while visiting the Philippines, PM Shinzo Abe said that there would be flexibility in approaching the consumption tax issue. While he said that the Fiscal Outlook report would be finished on time in August, he also said that the consumption tax hike as currently legislated would not be "hardwired" (kime-uchi) into fiscal plans. He denied having already ordered the responsible agencies to prepare different alternatives, as had been reported in the Nikkei on Saturday morning. [Note that the wording was ambiguous: He had not ordered the preparation yet.] Robert Alan Feldman
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