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European economy 3rd March 2020

The Eurozone’s Growth Will Be Half Of The Forecast Due To Covid-19 : 0.6% In 2020

Bank Of America Global Research | We lower our Euro area growth forecast to 0.6% for 2020 (-40bp), on the back of lower foreign demand (global growth downgraded to 2.8%, from 3.1%), supply chain disruptions and at least temporarily lower domestic demand from local virus hot-spots. We keep our 2021 forecast unchanged at 1.1%, assuming a permanent loss in activity. Euro area growth is expected be close to zero in 1H20 (with negative quarters in Italy and Germany part of our base case).

euro coin

European economy 28th February 2020

M3 growth in the Eurozone is still higher than the level compatible with 2% inflation

J.L. M.Campuzano (Spanish Banking Association) | The European Central Bank (ECB) published on Thursday the statistics for monetary aggregates in January. In January specifically, the growth rate accelerated to 5.2% per year. This increase in the M3 money supply continues to exceed the theoretical level compatible with medium and long-term inflation of 2%. The main contribution was from credit to the private sector, with an increase of 3.4% over last year.

riksbank

European economy 28th February 2020

The Cost Of Negative Rates: The Case Of The Riksbank

Caixabank Research | The experience of the Riksbank highlights the doubts over negative interest rates: despite a worsening economic outlook for Sweden, it raised the interest rate from –0.25% to 0% in December and abandoned its policy of negative rates.

Venezia coronavirus

European economy 25th February 2020

The Coronavirus In Italy And The ECB: Raising Quantum Of Corporate Bonds Purchases Can Be A Good Response

The sudden rise in covid-19 cases in Italy changes the picture for the European economy. Indeed, the activity restrictions already imposed by the national and regional authorities will be implemented in some of the country’s most crucial regions in terms of output. Lombardy, Veneto and Emilia-Romagna alone account for 40% of Italian GDP and 6% of total Euro area GDP. AXA IM suspect that the demand-side effects will emerge in the next batches of data and discuss options for the ECB.

Net wealth of European households lost in the crisis recovered; now is over seven times disposable income

European economy 14th February 2020

Net Wealth Of European Households Lost In The Crisis Recovered; Now Is Over Seven Times Disposable Income

In its latest monthly report, the European Central Bank has published an interesting study on the recent evolution of the wealth of European families.The monetary authority’s objective is to relate families’ net wealth component (assets less debt) to their spending decision. It’s a fact that, in theory,  net wealth accumulated with job prospects are both key for household consumption. In addition, wealth also has theoretical consequences for the design of monetary policy.

aranceles china

European economy 13th February 2020

The Coronavirus Crisis Could Cut 0.15% Off Spain’s Economic Growth; 0.18 off German Growth

Yesterday, ratings agency Standard & Poor’s published a report where it calculates that China’s coronavirus crisis will subtract one or two tenths off economic growth, both in the Eurozone and in the UK, in 2020. This is due to the impact on exports to China and on business investment. In Spain’s case, the figure may be excessive. This is because the impact on imports from China must also be taken into account and will work in Spain’s favour.