Eurozone
(May 2013) The International Monetary Fund has said Cyprus, a Eurozone member, has a realistic chance of posting some growth again in two years. But it warned that the country's current austerity program had to be followed through. In a staff report, the IMF said it expected the Cypriot economy to expand by a modest 1.1% in 2015 after plunging 8.7% this year and a further 3.9% in 2014. It also forecast that unemployment in the country would reach 15.5% this year and peak at 16.9% next year.
(May 2013) US growth is set to accelerate in the second half of the year. Fears of a spring slowdown in the US are viewed as exaggerated. Weak initial jobs figures have been revised away, and the labour market in the US continues to improve. In fact, US employers created an average of 208,000 jobs a month between November and April, 50% more than in the previous six months. Meanwhile, China has now embarked on a permanently slower growth path.
(May 2013) Reuters reported last month that a few hours after midnight one Sunday in March, as negotiations over a rescue for Cyprus dragged into a second day, Pierre Moscovici, French finance minister, fell asleep. Most Eurozone ministers in Brussels that night failed to notice, continuing to pore over the details of the multi-billion-euro deal. It fell to Christine Lagarde, former French finance minister and currently head of the International Monetary Fund, to approach Moscovici and nudge him awake, according to witnesses at the March 24 talks. It was an apt symbol of the impact in Europe of President François Hollande's government, as it enters its second year of office.
(May 2013) The global economic outlook dimmed this week with reports of manufacturing slowdowns in the US and China coupled with a deepening recession in the Eurozone. German industrial giants, Siemens, BASF and Daimler either cut their earnings forecasts for 2013 or announced a restructuring.
(April 2013) Eurozone membership provides Germany with significant economic gains that more than compensate for any advantages from a return to the Deutschmark. The currency union's benefits remain even if Germany were to retain the euro and take a significant haircut on its loans to four Eurozone countries hit hard by financial or fiscal crisis. Up to 200,000 job losses are estimated in the long-term, according to a research study. This scenario is not counting the chaos that would erupt in a collapse of the monetary union and the short term impact would be bad. The forecasters focused their calculation solely on the long-term impact of the euro on the German economy.
(April 2013) At the start of 2013, despite setbacks from recent financial crises, investors remain bullish on China and the US, as well as on industries such as oil and gas, agribusiness, healthcare and information technology (IT). Yet their optimism about short-term gains in these categories is tempered by long-term concerns about structural weaknesses in the global economy.
(April 2013) With many of the region’s economies doing well, policymakers in Latin America should take advantage of the current favourable economic conditions to lay the foundations for strong and sustainable growth, said Alejandro Werner, head of the IMF’s Western Hemisphere Department, last weekend. He is not the only optimist but for a region strongly dependent on commodities, global economic news on Tuesday wasn't encouraging. South America is as commodity dependent (or more) as four decades ago, with exports of basic goods reaching about 10% of GDP in 2010. But this contrasts markedly with the pattern seen in Mexico and Central America - - where commodity dependence has fallen sharply, reaching balanced trade in 2010. It is also very different from the trend observed in emerging Asia, which has gone from being a net commodity exporter in 1970 to a net importer in 2010. For Latin America and the Caribbean as a whole, the share of primary commodities in total exports rose from 50% in 1995 to 55% in 2009.
(April 2013) Confusion and renewed uncertainty about the design and timing of EU banking union has been caused by the statements of finance ministers from some EMU core countries, especially Germany’s Wolfgang Schäuble, Germany's finance minister. These comments suggest that a Treaty change is viewed as necessary to establish a pan-European resolution regime and that such a regime, in turn, is a prerequisite for starting the single supervisory mechanism (SSM).
(April 2013) Kenneth Rogoff and Carmen Reinhart, the US economists who have been accused of dodgy calculations in a paper on the impact of high government debt that became a crutch for some advocates of austerity, have hit back at their critics and defended their central claim.
(April 2013) Mario Draghi, ECB president, said in a speech on Monday that the way out of the problems facing many Eurozone countries is to restore competitiveness. "And the way to do this in the context of a monetary union is to pursue with determination an ambitious structural reform agenda. Such an agenda comprises a number of national measures to make sure that the functioning of product and labour markets is fully compatible with participation in monetary union. One specific aspect is to fight vested interests that hamper competition, structural weaknesses of productivity and to allow, where needed, the nominal adjustments to play out." Italy, Draghi's own country, is facing problems it has allowed to fester for decades.
