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Europe & World December 2016

Published: Jan 10, 2017
  • Growth Forecasts Worldwide for 2017 are reported as follows:
    • World 3.4%
    • US 2.1%
    • Euro Area 1.5%
    • Japan 0.8%
    • UK 1.0%
    • China 6.2%
    • Latin America 1.7%
    • Middle East & N Africa 3.7%
    • Emerging & Dev Asia 6.2%
    • Russia 0.6%
    • Sub-Sahara Africa 3.2%
  • The euro-zone unemployment rate has finally fallen to single figures coming in at 9.8% for October.  However, Greece’s jobless rate remains stubbornly high at 23.4% with Spain at 19.2%.  Both countries show a whopping 40% youth unemployment
  • The European Central Bank announced that it will scale back their bond buying programme from April 2017.  The monthly spend will reduce by €20bn to €60bn.
  • Turkey suffered shrinkage of its economy for the first time in 7 years during Q3 2016. The failed coup and a weakening currency attributed to the 1.8% YoY contraction.  Tourism to the country has also been hit following several terrorist attacks throughout the year.  Services shrank 8.4% YoY in Q3 with agricultural output falling by 8%.  Consumer spending was also down, declining by 3.2%.
  • 14th Dec: US shares surged to record highs following expectations that the Federal Reserve Bank will raise their interest rates by 0.25%. 
  • The US Federal Reserve raised its main interest rate by 0.25% which was an expected move. 
  • A new report by Wood Mackenzie suggests that if OPEC can keep the price of oil above $55 a barrel, it will turn cash flow positive in 2017, which would be the first time in 3 years.  Confidence in the industry was buoyed by the November agreement by OPEC to curb their output.
  • German business morale reached its highest since February 2014 in December.  This however was before the Berlin Christmas Market attack on 19th December.  On Friday 16th December, Germany reported that it expected Q4 to rebound stronger than expected.
  • Australia has downgraded growth forecasts and increased its’ budget deficits for the next 4 years.  This has raised concerns that the country could lose its AAA rating.  Slow growth in wages and profits made by company’s were attributed.  GDP has been revised down to 2% for 2016, compared with 2.5% earlier in the year.  The budget deficit for 2019 – 2020 has been forecast at Aus$10bn.  Australia once enjoyed significant mining investment but this has contracted recently.  Australia has had 25 years of growth without one recession. 
  • The world’s oldest bank – Monte dei Paschi – looks set to be bailed out by the Italian state in a €20bn package.
  • Manufacturing in the euro-zone grew at its fastest rate in December since April 2011.  Markets reacted favourably to the news when the stock exchanges opened on January 2nd 2017.  The PMI for December was 54.9 and a rise on November’s 53.7. 
  • Readings from the overall manufacturing sector in Europe showed Germany’s reading at its highest in 3 years and France’s reading was at its highest in over 5 years. 
  • US growth was higher than expected in Q3 2016 with its best performance for 2 years.  The GDP grew by 3.2% rather than the expected 2.9%.  Growth was buoyed by business investment and homebuilding.  The dollar rose on the news.  

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