MADRID | March 24, 2015 | By J.P Marín-Arrese | On face value, Europe is recovering from a bad spell while the US is growing at an invidious rate. However, the wild currency swing may yet destabilise the global economy. Janet Yellen’s remarks on the threat of an overvalued dollar were designed to preserve a balanced performance, and indeed sparked a quick reaction in exchange rates. Yet, as the ECB unfurls its massive quantitative easing programme, volatility in the currency markets could inflict further damage.
MADRID | The Corner | EU posts marginal growth stats, but the figures are indicative of slow pace of recovery.
MADRID | By JP Marin-Arrese | European governments are openly expressing dismay at the Greek election outcome. They have waited quite a long time to convey their congratulations wishes to Tsipras, the new elected Prime Minister. Berlin and Brussels stressed that debt restructuring was out of question while reminding him of the need to keep pledges from former governments as a pre-condition for securing financial support. Yet, they should come to terms with him, the sooner the better, as a thoroughly deceived and frustrated European Council member can inflict damage to EU action.
ZURICH | UBS | The impact of an EU slowdown on US growth would be minimal: US exports to the EU are a small proportion of GDP (2.8% in 2013), and the secondary effects—the impacts on major US trading partners’ incomes and import demand—are even smaller. For example, a hypothetical 1 percentage point slowing in EU real GDP growth would likely translate into only a 0.1 pct pt drag on US real GDP growth via weaker exports to the EU and to other US trading partners affected by the EU slowing.
NEW YORK | By Dickson Buchanan Jr. via Truman Factor | The European Central Bank’s (ECB) decision to charge a negative interest on overnight deposits is not going to lead to a higher targeted inflation rate, despite ECB President Mario Draghi’s insistence that it will. Like all cases of central planning, this decision will have unintended and costly consequences – some of which are already starting to play out.
LONDON | By Barclays analysts | Under our macroeconomic scenario of a mild and uneven recovery combined with subdued inflation, we do not expect the ECB to cut rates further in the coming months despite recent speculation (Bloomberg news) that it was considering a negative deposit rate.
MADRID | By Fernando G. Urbaneja | The present crisis is punishing the Europeans more than anyone else, although Germany is quite well. However, the scarce economic growth, high unemployment rates, and questionable living conditions of the society lead to think that the EU has resigned to mediocrity.