Economic research
Etudes économiques
Version française |
|
|
|
Eco Focus – Edition February 1, 2012
The results of the latest Bank Lending Survey by the ECB look slightly less negative to us than what could have been expected, pointing to growing demand- and supply-driven constraints on bank credit, but not to a broad-based credit crunch. Commercial banks expect a ‘sizeable' drop in loans to households for house purchases, but this is a typical lagging indicator and the outlook for loans to Non-Financial Corporations looks less worrisome.
ECO Focus - Edition January 17, 2012
Rating agency Standard & Poor's (S&P) announced on Friday 13 January 2012 that it was downgrading the sovereign credit rating of France and eight other eurozone countries. For France, the downgrade is likely to mean higher long-term interest rates for the foreseeable future, which will increase the debt burden and adversely affect budget balances. France has sufficient fiscal elbow room to absorb the higher borrowing costs. Moreover, the effects on the business climate should be relatively limited.
Eco Focus - Edition January 16, 2012
S&P’s decision to selectively downgrade nine Eurozone countries on Friday was broadly expected and priced in, although somewhat surprising in terms of timing and justification. The immediate implication for each member state should remain limited overall, in terms of both market pricing and bond eligibility at ECB repos, in particular. The EFSF, which remains on CreditWatch, basically has two options. It must either accept a drop in its lending capacity of about EUR180bn in order to keep its AAA rating; or it must accept a downgrade to AA+ to keep its EUR440bn capacity. EFSF cost of funds and market access matter the most, however, and it is not like the EFSF was able to raise large amounts of cash at AAA-equivalent levels of yields before the downgrade.
Eco Focus - Edition January 13, 2012
The ECB left its policy rates unchanged at today's meeting. The official statement still reflects an easing bias, in our view, although "substantial downside risks" are to be balanced with "tentative signs" of stabilisation in the economy. The near-term outlook for ECB rates will prove to be highly data-dependent. We still look for the ECB to ease further this year, but the pain threshold has likely edged higher and we now forecast a 25bp rate cut in March only, followed by another 25bp move in Q2, bringing the Refi rate to 0.50%.
Eclairages Macro – Edition December 2011
Since the beginning of the Greek crisis in late 2009, it has become increasingly common to compare Greece today with Argentina's situation ten years ago. Given Argentina's post-crisis economic recovery, some go as far as to predict, or even recommend, that Greeks opt for an identical shock therapy by exiting from the euro zone, reintroducing a severely devalued national currency and going into a unilateral default. Nevertheless, comparisons are often misleading. We see several major differences that make the Greek situation unique and that require extreme caution when considering the best remedy to be used to end the crisis.
Macro Prospects - Edition Decembrer 2011
The West is facing a crisis that is mutating. In the beginning, excess debt in the private sector triggered a balance-sheet recession; then the decline in growth, in an environment of too loose fiscal policy management for too long, set off the sovereign crisis, which has compounded the mistrust in banks. In any case, economic policy "room for manoeuvre" (in the usual acceptance thereof) is limited. Over the next year, fiscal policy's ultimate goal will be the reduction of the public debt to GDP ratio; the only flexibility is perhaps the mix of short-term stimulus and a strong commitment in the medium term to orthodoxy from countries still benefiting from ample and stable government market liquidity.
Eclairages Emergents - Edition December 9, 2011
The 1997 crisis has been steep. Forced to reform, the Indonesian economy has won in stability since then. The way it surmounted the 2009 global crisis without too much difficulty shows it. This should provide reassurance in a degraded international environment. Indonesia's economy is expected to grow by just under 6.5% this year, and could grow by around 5.5% in 2012. In the medium and long term, the country has significant potential. Demography is an undeniable source of economic vitality-provided GDP growth becomes more inclusive, which would call for dealing with shortcomings in education, infrastructures and governance, despite doubts in light of the political context. Still, Indonesia should nonetheless be able to join the BRICs within the next ten years.
|
|
|
|
|