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World economy 19th August 2014

Further policy easing to support China’s property downturn

MADRID | The Corner | The biggest uncertainty for China’s economy now and in 2015 is the nature and duration of the ongoing property downturn. Following a sharp drop in the beginning of 2014, Chinese property construction has shown signs of improvement in recent months as policies have been increasingly relaxed. Both have provided support for the economy and property related stocks, with the latter rallying by 17% from trough levels. However, UBS analysts expect that the property downturn will weigh more heavily on growth in Q4 and 2015.

No Picture

World economy 18th August 2014

Jackson Hole: Without inflationary pressures on the horizon

MADRID | The Corner | Central bankers are meeting this week in Jackson Hole to talk about employment and its weakness in general terms. Unlike what is happening in Europe, US and UK are seeing improvement in employment (their unemployment rates have decreased from 10% to 6.2% and from 8.4% to 6.4%, respectively) with the curiosity that they’re not coming with wage increases. In fact, last British data shows the first fall since 2009. This circumstance means less inflationary pressures, therefore Bankinter analysts think that central banks will not start to tense its monetary policy until wages begin to invigorate, something that will take some months to arrive.

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World economy 14th August 2014

Stock markets go up despite poor global macroeconomic data

MADRID | By J. J. Fdez-Figares (LINK) | European and American stock markets closed yesterday up in a session of low activity and  volatility. The good performance of Western stock markets ​​occurred despite the set of macroeconomic figures published during the day in China, Europe and the USA, which pointed again to a global slowdown in economic growth. The only explanation we can find to the good performance of stock markets yesterday is precisely that investors have interpreted that as long as the growth of these economies remain weak, the central banks will be forced to maintain its current policy of monetary expansion, which provide liquidity to the system, something that equity markets consider positive.

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World economy 13th August 2014

Georgia judges his ex-president and lifts the economy

MADRID | By Ángel Maestro | August arrived with the positive outcome that the IMF Executive Board will support the economic reform program in Georgia with 154 million Stand-By dollars. Among the economic measures, paradoxically, to reduce the dollarization in favour of the home currency and the euro, in order to accelerate its economic and political stabilization process. Concerning the second is the macro-judicial processes that will begin this Saturday against its former President Mikheil Saakashvili in relation to abuse of power charges which have driven numerous concerns by several worldwide institutions and non-governmental organizations.

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World economy 13th August 2014

UBS: Data support acceleration in US real GDP growth

MADRID | The Corner | From the macroeconomic side, US data are showing a clear improvement in the economy, with the labor market growing at similar rates to those seen prior to the financial crisis and consumer confidence surging in July to the highest level since October 2007. The business results also show a positive trend with growth in earnings by 12.0% (ex-financials) and +10.0% inc. financials.

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World economy 7th August 2014

Top One Percent Has One Third of China’s Wealth, Research Shows

BEIJING | By Zhou Dongxu (Caixin) | China’s income inequality is relatively high, and its wealth inequality, as measured by the Gini index, is greater than its income inequality. The U.S.’ income inequality index is lower than China’s, but its wealth inequality is higher – Its Gini coefficient for household wealth was 0.8, compared with China’s 0.73. This is because the United States has a relatively mature market economy, where wealth has been accumulated slowly through income and investment. Many in China, however, own homes allocated to them by the government. As those homes’ value increased, so did their wealth.

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World economy 7th August 2014

JPMorgan: Global economy might pivot to above trend growth in 3Q

MADRID | The Corner | JPMorgan’s economic outlook forecasts that global growth is taking hold around midyear and as a rebound from weakness the US and Japan is reinforcing a more modest acceleration in the Euro area and emerging Asia. If JPMorgan analysts are right, this episode’s contours should mirror growth pivots in earlier expansions (during 2003 and 1993).