Global Economics
Highlights
No end yet to fiscal gridlock
The US Congress has just enacted a further extension, through the remainder of calendar year 2012, of several key measures that otherwise would have expired on February 29. The fact that these extensions are being finalized a full 12 days before the deadline suggests that the gridlock which has beset the federal government in the recent past has been broken, but in fact that is unlikely to be the case.
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The Eurozone economy moves into recession
Eurozone GDP fell 0.3% in 2011Q4, in our view the first quarter of a renewed recession, and we now forecast that GDP will contract by 0.4% this year. This assumes that the region’s sovereign debt crisis does not escalate further and the ECB continues to provide ample support. We currently estimate that there is 40% probability that this scenario unfolds
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Turkish growth beaten only by China in 2011 but big slowdown needed if inflation is to fall back to target
Despite the turmoil in global financial markets induced by the Eurozone debt crisis, Turkey’s economy is likely to have grown well over 8% in 2011 as a whole. And while part of this reflects the carry-over of momentum from when global conditions were more helpful, even in Q4 industrial output rose by over 3% on the quarter – helped by a more competitive exchange rate.
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20 February 2012
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Credit Crunch Watch:
US stress levels ticked up this week for the first time in seven weeks, thanks to increased equity volatility. But the rise was marginal and US monetary trends continue to suggest an absence of ‘credit crunch’ tendencies – commercial and industrial loans are rising at an 11% annual rate with broad money growth also solid. In the Eurozone, this week saw some renewed jitters over Greece which fed into a worsening of some stress measures such as Italian and Spanish sovereign bond spreads. But interbank spreads narrowed again suggesting easing funding pressures for banks and this week also saw a marked narrowing in sovereign spreads in Portugal – the country widely seen as next in line should Greece collapse – although spreads remain very high at 1000 basis points over German bunds
17 February 2012
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Country Economic Forecasts
These concise reports provide regular analysis and forecasts on economic conditions and policy developments in 191 countries. They include downloadable spreadsheets covering 10-year forecasts and 20 years of historical data for key economic indicators.
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