BofAML | No surprises. We do not expect any ECB action this week. After the package in March, we think the ECB will have a few months before going back to the drawing board. Dovish Fed tones and EUR appreciation do not help the ECB, but action beyond a reiteration of forward guidance seems very unlikely.
Guntram B. Wolff via Caixin | G-20 ministers in Shanghai appeared to be aware of the importance of structural work. In particular, there was agreement in our panel discussions that the Base Erosion and Profit Shifting (BEPS) project of the OECD was an essential element to deal with tax avoidance and ensure that profits are taxed where economic activity generating it takes place.
The figures issued by the Bank of Spain have confirmed what we could already see with the naked eye; namely that Spaniards are losing their fear of the future and spending again. After several years of austerity, the consumers in Spain have gradually loosened their purse strings over the past year. And to such an extent that consumer spending rose 3.1% in 2015, almost tripling the 1.2% registered a year earlier.
Euro area GDP growth and inflation remain positive but near to zero in the second quarter.
MADRID | Global GDP showed a moderate growth recovery in the second quarter. In Spain, forecasts point to GDP growth accelerating again to 1% Q0Q, one of the highest rates in the eurozone.
Spain’s public deficit ranks as the highest one in the eurozone, with the exception of Cyprus. Up to now, a set of exceptional circumstances has allowed for a stance of benign neglect at visible cost. But dangers loom ahead if fiscal rectitude is not firmly enforced.
ZURICH | UBS analysts | The recent general strength of the dollar has a bearing on commodity prices, clearly. Commodities are universally priced in dollars, and as homogenised products dollar appreciation should lead to a decline in commodity prices in dollar terms. However, the strength of the dollar against sterling (in 2008/9) or against the yen (sporadically since 2012) did not lead to UK or Japanese exporters cutting the dollar price of their manufactured products or services.
By the RSA | Two-thirds of the world’s population live in countries that are now more unequal than they were in 1980. Our politicians are hung up on keeping the economic growth curve rising. But does GDP really tell us all we need to know about a country’s wealth and well-being? In this Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) Short, Kate Raworth makes a powerful argument to look beyond economic growth alone for a true measure of prosperity and progress.
MADRID | The Corner |Besides naming the reshuffle of his Government, after a dispute over hauling the economy out of stagnation caused his government’s collapse, François Hollande has also committed to announce this week a package of measures to revive the economy, including specific stimulus for the construction activity, especially affected in terms of employment by a law to regulate the real estate market precisely adopted at the beginning of his term. It is estimated that construction activity in France represents about 8% of GDP and 1.2 million jobs.
Via Caixin | By Miriam L. Campanella | Media outlets have published news that based on a World Bank report China’s economy will be the world’s largest in terms of purchasing parity power (PPP) by the end of 2014. Yet, China itself did not welcome the news. The World Bank included a note in its report that the country’s National Bureau of Statistics contested the methodology and rebuffed the report. The Financial Times even reported how China tried to convince World Bank analysts not to use the data. “China wanted to throw this out,” one source said.