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Europe & World Mar 2017

Published: Mar 10, 2017
  • German factory orders rose by 5.2% which was the largest incline since July 2014.
  • The German economy grew by 0.4% for Q4 2016.
  • Investor sentiment in Eastern Europe has dropped with a reading for February showing 9.8 which is 4.7 pts below January’s figure of 14.5. 
  • Latin America’s investor sentiment improved slightly for February although it is still in negative territory at -10.8.
  • Argentina: Peso loans grew by 2.7% in October, 3.2% in November and 5% in November as lending finally shows signs of recovery.  Monthly inflation in Argentina has fallen from 4.5% this time last year, to 1.5% in February 2017. 
  • France: Borrowing on 10 year bonds is now at 1.045% per year, overtaking Ireland’s 1.037% per year.  The rise in French debt, which has overtaken Ireland’s borrowing costs, is due to nervous investors worried about the upcoming presidential elections. 
  • An agreement to unlock the bailout payments for Greece due in July has still not been reached.  European creditors have now agreed with the IMF that Greece needs to implement further structural reforms before funds can be released. The IMF has consistently said that Greece will not be able to make its bailout target and that the debt is unsustainable.   Two-year Greek bonds dropped to 9.09% on 20 February.   Public debt for 2017 is expected to hit 181% of GDP.  The economy is expected to rise by 2.7% for 2017 compared to 0.4% in 2016. 
  • France is currently on course to reach a budget deficit of 3.1% of GDP in 2018 which exceeds the Eurozone’s limit of 3%, and therefore in breach of EU budget rules.  It is now a decade since France fell below the 3% limit. 
  • The European Commission has estimated that Italy’s public debt is at 132.8% of GDP for 2016 and is expected to increase for 2017.
  • The European Commission expects growth in the Eurozone to be 1.6% for 2017, compared with 2016’s 1.7%.
  • The Japanese economy grew 1% in Q4 2016 due to an increase in exports and investment.   There was no growth however in consumption during Q4.  It is expected that weak domestic demand will continue to be balanced by external demand resulting in only moderate growth going forward. 
  • German two year bonds hit a record low on 22 February to -0.92% as support for France presidential hopeful Marine Le Pen grows.  Le Pen has vowed to remove France from the EuroZone.  German bonds are seen as a safe haven amidst the turmoil that will be caused if Le Pen were to win as a ‘redenominated German currency is likely to appreciate against other currencies.’
  • USA: Minutes from the Federal Reserve’s meeting in January say that it would be ‘fairly soon’ before short-term interest rates rise following continued US economic growth.  Whilst the outlook is unclear at the moment following the inauguration of President Trump and therefore White House economic policies, the Federal Reserve says it is ready to act if the jobs market and inflation numbers came in on target, or above target.  

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