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Europe & World Apr 2017

Published: Apr 18, 2017
  • China: average wages are catching up with those in Portugal and Greece, and have exceeded those in Brazil and Mexico as China’s decade of massive growth have helped triple pay packets.  Hourly wages are $3.60 and now exceed every country in Latin America bar Chile. 
  • The US GDP grew 1.9% on an annualised pace for Q4 2016 which was a decrease on the 3.5% recorded during Q3.  This drop was attributed to decrease in exports, an increase in imports and a drop in government spending.  Consumer spending grew 3% during Q4.  2016 as a whole saw the US economy grow by 1.6% which is the lowest growth in 5 years. 
  • USA: the economy reports a trade deficit of €69.2bn, an increase of 7.6%. 
  • Germany’s inflation rate rose in February to 2.2% which is its fastest pace in over 4 years. 
  • EuroZone: Factories reported a PMI of 55.4 for February vs 55.2 in January.  February’s reading is the highest in nearly 6 years.
  • Australia reported growth in Q4 following a contraction in Q3.  The growth avoids Australia’s first recession in over 25 years.  GDP grew 1.1% QoQ.  Annually, GDP grew 2.4% which is below par for such a developed economy. 
  • USA: Janet Yellen of the Federal Reserve has raised interest rates by 0.25 points.  It is only the third increase since 2007, and the second in 3 months.  It comes on the back of a growing US economy and a strong uplift in job gains. 
  • Germany: Government spending is expected to increase to €38bn by 2021 in a document drafted by the German Finance Department. It is expected that they will however stay within a balanced budget.  It comes on the back of 1m migrants arriving in Germany over the last 2 years, with some of the extra spending due to go on accommodating migrants & refugees. 
  • Greece: the country missed another deadline which would have unlocked funds for the indebted country.  The EuroZone has said that the Greek government have not yet complied with the terms for the emergency loans triggered in 2010.  Greece is due to make €7bn worth of bond payments in July this year.  The German government is pushing for Greece to meet the necessary conditions before any drawdown of debt relief funds can take place. 
  • Global unit sales of heavy duty construction equipment, which took a massive hit during the downturn, grew 1% in 2016 and there are indications that growth this year will reach 9%.  China accounted for four out of every 10 construction machines sold during 2011 in response to a government stimulus.  This drastically decreased during the next few years but there are signs that China are starting to investment again in building equipment.  
  • China is the biggest investor in Malaysian property, overtaking Singapore.  China has invested over $2.1bn over the last 3 years.   Singapore invested $985m during the same period.  During 2016, China had overseas investments of $33bn in 2016.
  • Argentina reportedly saw inflation running at 40% during 2016 with GDP decreasing by 2.3% for 2016.  The economy grew by 0.1% for Q3 and 0.5% Q4 2016.  There have been 25,000 jobs created per month since October 2016.  Moody’s has upgraded Argentina to ‘positive’ from a ‘stable’ during March.  However, there have been protests in Buenos Aires in recent weeks as people grow weary that the economic improvements have not trickled down to them. 
  • Eurozone: Unemployment rate is now at an 8 year low with 1m people taking up employment during the past year as recovery of economies finally gathers pace.   Unemployment now stands are 9.5%.  The UK saw 8 consecutive months of expansion in manufacturing, and Italy saw factories at their busiest in 6 years.  Manufacturing in Italy is responsible for 15% of their economy. 
  • Spain: The Bank of Spain increased its growth forecasts for Spain over the next 3 years.  It expects the economy to grow by 2.8% this year, rather than an initially reported 2.5%. 
  • Nigeria’s economy contracted for the first time in 25 years as the country shrank for the fourth consecutive quarter in Q4 2016.  It is Africa’s top oil producer.  Oil productivity shrunk 14%.  Overall, the economy contracted by 1.5%.  The fall in economic activity comes from weak consumption demand impacted by inflation, and a reduction in foreign reserves.  

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