Just a few weeks before the ECB’s key meeting (4th June), Lagarde has responded to Germany with the biggest weekly purchase since the start of the pandemic: 44 billion euros, 54% higher than the weekly average since April. Furthermore, Olli Rehn affirmed that the German Constitutional Court’s ruling could have an impact on the central banks’s ability to exercise its price stability mandate.
The German Constitutional Court surprised everyone yesterday with a ruling that some of the European Central Bank (ECB)’s actions, carried out as part of its 2015 bond purchase programme (PSPP), are unconstitutional. This decision clashes directly with the judgement of the European Court of Justice (ECJ). The decision does not call into question the entire debt purchase programme, but rather the part relating to the Bundesbank’s intervention.
Banca March | German Finance Minister Olaf Scholz is considering temporarily lifting the suspension of the country’s debt limit in what would be a major change in the fiscal policy of Europe’s leading econom.
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.
The world has changed a lot because China has changed a lot. China’s share of global GDP has risen from a negligible 2% in 1990 to 15.9%. Meanwhile, the other powers have fallen in that period: Japan, from 14 to 5.8%; Europe, from 35% to 21.9%; and the USA, from 27% to 23.9%, according to Weltbank data. So hundreds of thousands of jobs in Germany are now dependent on China. And all over the world, because China today accounts for 1/3 of world growth.
There are a few paradoxes in Europe’s biggest economy unquestionable economic slowdown. Labour market remains solid. The last macro data shows a lower deterioration than expected, thanks to the expansion of other neighboring economies such as the French. Also, Berlin malaise has not hit the stock market. The DAX has outperformed other European indexes this year.
Lidia Conde (Frankfurt) | The fourth globalization now punishes the German middle class, which perceives how the revolution accelerates and introduces new elements such as the competence of Indian computer experts operating from home: they do not need to emigrate to work.
Gilles Moëc (Axa Investments Manager)| Those who like to see their glass half full probably took comfort in the fact that in Germany the manufacturing Purchasing Managers Index rebounded by 0.2 pp in October relative to September, but this was again short of expectations and the absolute level remains very concerning.
Caixabank Research | Having grown at an acceptable 2,8% in 2017, Germany slowed sharply in 2018 and, in the last four quarters, interannual growth has on average been a miserable 0.8%. In the second quarter, in fact, growth was negative, and everything point to this tendency being maintained in the third quarter, which would mean entering a technical recession. Below we analyse why.
Industrial Production in Spain rebounded strongly in August. Specifically, it advanced to + 1.7% a / avs. + 0.6% estimated and + 1.2% above (revised upwards from + 0.8%).