UBS | Brazil is arguably facing its deepest recession since the 1930s. However, the recent improvement in investors’ perception of the country, combined with data suggesting economic activity is stabilizing, raises the critical question of whether Brazil has reached an inflection point.
Christine Lagarde’s two-day-visit to China concluded on Monday without any specific agreements on how Beijing will fend off financial risk. But Premier Li Keqiang insisted that they will use all the tools available. Trillions of renminbi of debt have built up in the Chinese economy as a result of decades of stimulus and easy credit.
Both main central banks face a challenging outlook. The ECB may have saved the day recently by showing it still commands enough firepower to support the economy, even if its room for manoeuvre seems hopelessly narrow. The Federal Reserve seems caught in a nasty trap.
Citi | After the recent events, culminating in the execution of the bench-warrant of former President Lula on February 4 , we have reassessed the probability of our current muddling – through macroeconomic scenario and conjectured alternative scenarios .
Julius Baer Research | Against all odds the US Federal Reserve (Fed) continues to show a bias towards normalising rates. Comforted by stabilising financial conditions and a pickup in inflation, the Fed will try to guide market expectations towards additional rate hikes this year.
Veena Trehan | Obama’s legacy will be scarred if he deviates from focusing on addressing climate change. In August 2015, US President Barack Obama made a memorable trip to the Arctic just months after approving Shell’s drilling off the coast of Alaska. At the time, he said: “Climate change is no longer some far-off problem; it is happening here, it is happening now.”
Many respected analysts believe that GDP growth will be closer to 5% than the 6.5% announced by the Chinese authorities in their latest five-year plan. As a result of this, these analysts expect a rise in social unrest. And the Chinese government’s goal of reducing industrial overcapacity by firing 5-6 million employees in so-called “zombie companies” over the next 2-3 years will serve to heighten tensions.
Xing Yun via Caixin | Acknowledge the elephant in the room, but don’t exaggerate its weight. That’s the simple way of expressing Minister of Finance Lou Jiwei’s attitude as a policymaker toward the big risks looming over the global financial system, including China’s US$ 12 trillion economy. He sheds light on G-20 negotiations and the reasoning behind a successful outcome.
James Alexander via Historinhas | Despite all the pessimism the Euro Area nearly caught up with US NGDP growth in Q4. Now that Italy and Spain have finally reported their Nominal GDP figures Eurostat shows that 4Q15 NGDP growth for the Euro monetary region as a whole was almost as fast, year-on-year, as the US.
The economic world is deeply divided over whether or not we are facing a new recession. And some people are putting forward sufficiently solid arguments which easily eliminate any doubts on the subject. Although there is data to support the doubts existing in both the US and Europe, it’s also true that there are solid economic fundamentals which defend the thesis that a recession doesn’t seem to be imminent.