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Nadia Gharbi

Nadia Gharbi



Articles by Nadia Gharbi

No hint of Swiss rate rise

5 days ago

The Swiss National Bank left monetary policy unchanged at its latest meeting and forecast that the Swiss economy would grow 1.5% in 2017.At its latest policy meeting on 16 March, the Swiss National Bank (SNB) left the interest rate on sight deposits at a record low of -0.75% and the central bank reiterated its willingness to intervene in the foreign exchange market if needed, “taking the overall currency situation into consideration”, as it had mentioned in its previous press release. The SNB revised slightly up its inflation forecast for 2017 from 0.1% to 0.3% and foresees inflation of 0.4% and 1.1% for 2018 and 2019, respectively. The central bank remains “cautiously optimistic” for 2017 growth outlook, maintaining its forecast for the Swiss economy to grow by 1.5% in 2017.Our baseline

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Switzerland: modest recovery remains on track

19 days ago

GDP growth picked up in 2016, with the export-orientated manufacturing sector contributing positively in spite of the strong franc. We expect the Swiss growth rate to be broadly similar this year.The Swiss statistical agency (SECO)’s quarterly estimates show a provisional GDP growth rate of 1.3% in 2016 compared with 0.8% in 2015.Two aspects of today’s report are worth mentioning. First, on the expenditure side, both domestic demand components and foreign trade helped to boost Swiss growth in 2016. It was a much better year for exports than 2015, even though the good performance hid significant divergence across sectors. Second, on the production side, the largely export-oriented manufacturing sector, hit hard by the sharp appreciation of the Swiss franc the previous year (the so-called

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Euro area: latest figures raise our 2017 GDP forecast to 1.5%

January 31, 2017

Growth in the euro area outstripped growth in the US last year, while the latest indicators suggest 2017 has gotten off to a strong start. Our GDP forecasts are pushed up mechanically. Euro area real GDP expanded by 0.5% q-o-q in the fourth quarter, marking an acceleration from Q3’s 0.4% gain. The euro area economy grew at an annual average of 1.7% in 2016, compared with 1.9% in 2015. Last year was the first time since 2008 that real GDP growth in the euro area was above that of the US.Today’s GDP report mechanically pushes up our GDP forecast for 2017 from 1.3% to 1.5%. But it is worth mentioning that this does not change our central scenario for the euro area this year, as we are keeping unchanged our forecast for the pace of growth for the rest of the year.As for 2017, the first set of

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First tightening of euro area credit standards in three years

January 17, 2017

The latest Bank Lending Survey (BLS) from the ECB, showed that credit standards tightened somewhat in Q4 2016. But the details were much more upbeat than the headline reading.Credit standards on loans to euro area enterprises tightened in Q4 2016 for the first time in three years. The move was essentially driven by developments in the Netherlands. Demand for credit continued to rise across all categories of loans, once again driven by generally low interest rates and M&A activity.Looking ahead, banks expect a net easing of credit standards across all loan categories in Q1 2017.The main takeaway from the Q4 Bank Lending Survey (BLS) report is that the ECB’s expansionary monetary policy is likely to be maintained throughout this year. Given that the BLS is signalling more modest gains in

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The ‘Frankenshock’, two years on

January 16, 2017

The Swiss economy has proved more resilient than expected to the sudden appreciation of the Swiss franc in January 2015, but negative deposit rates could remain in place through 2017.On 15 January 2015, the Swiss National Bank (SNB) decided to discontinue the minimum exchange rate of CHF1.20 per euro introduced in September 2011. The SNB’s announcement came as a shock for the Swiss economy, and resulted in a sharp appreciation of the Swiss franc. But two years later, the Swiss economy has proven to be more resilient than expected: recession has been avoided and inflation is gradually rising. In summary:Swiss real GDP grew by 0.8% in 2015, may have grown by 1.5% in 2016, and could grow by 1.4% in 2017. Domestic demand has been robust. Exports of goods have performed better than expected,

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Euro area headline inflation rises at fastest pace since September 2013

January 4, 2017

Nonetheless, the acceleration in headline figures in December masks subdued core inflation. We believe weak core prices will mean the rise in headline inflation will soon stall.Euro area flash HICP inflation rose from 0.6% in November to 1.1% year on year (y-o-y) in December, while core inflation increased slightly to 0.9%, both above consensus expectations. The breakdown by components showed that the main driver of the increase was energy prices.In the next few months, euro area inflation is likely to move higher, driven by energy-base effects. Headline HICP will peak at close to 1.5% y-o-y by the end of Q1 2017 according to our forecasts, using market expectations for oil prices and the currency. We then think price rises will stabilise as core inflation (excluding food and energy) is

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Referendum at heart of Italian uncertainties

November 14, 2016

A ‘No’ vote in the 4 December referendum would be seen as a negative by investors in Italy, adding to the challenges the country must face.The 4 December referendum on senate reform is the next big event on the European political calendar, coming just ahead of the next ECB and Fed policy meetings on 8 December and 14 December, respectively.We believe a ‘Yes’ vote would boost government confidence and marginally help Italian securities, but is unlikely to represent a significant game changer for Italy and for the euro zone as a whole. By contrast, a ‘No’ vote would add to the current political uncertainty and could hurt an already fragile and modest recovery.Italian sovereign bonds have come under increasing stress. The spread between 10-year Italian government bonds and their Spanish

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Euro area GDP growth in line with expectations

October 31, 2016

3Q GDP growth in the euro area met expectations. The play off between strong business indicators and weak-ish credit dynamics means we maintain our full-year growth forecast of 1.5% in 2016.Euro area real GDP expanded at a quarter-on-quarter (q-o-q) rate of 0.3% in Q2 (1.4% q-o-q annualised, 1.6% year on year), in line with expectations and our own forecast. This comes after GDP growth of 0.3% q-o-q in Q2 and 0.5% q-o-q in Q1.Looking ahead, risks to our scenario for the euro area economy seem to be broadly balanced, if not tilted to the upside in the short term. On the positive side, euro area sentiment indicators have been coming in above expectations. In particular, Markit’s composite purchasing manager index for October was consistent with a GDP growth figure of 0.4-0.5% q-o-q in Q4 ,

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Euro area business surveys point to strong start to Q4

October 25, 2016

Markit Flash PMI surveys for October were above consensus and there was a considerable improvement in sentiment in Germany, possibly pointing to stronger Q4 GDP figures.

Euro area business surveys just released show a solid start to the fourth quarter. More importantly still, these forward-looking indicators suggested that growth is likely to gain momentum in the months ahead, in particular in Germany. The good performance of the German manufacturing sector suggests that external demand might be less a drag than in previous quarters, with respondents to the survey mentioning strengthening demand from Asia and the US.According to Markit’s preliminary estimates, the euro area composite purchasing managers’ index (PMI) increased from 52.6 in September to 53.7 in October, much stronger than

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Spain: an end to 10 months of political deadlock

October 24, 2016

Macroview
There is a risk that government will not be able to serve full term, but markets are now becoming more focused on the Italian referendum in December.

After 10 months of political impasse, Spain is set to have a new government at the end of this week. The decision by the Socialist party (PSOE) to abstain in the second parliament investiture vote clears the way for a minority government to be formed under prime minister Mariano Rajoy and thus avoids the need for a third general election in a year.The centre-right Partido Popular will most likely be alone in the minority government as Ciudadanos and other parties have been indicating that they do not wish to be part of it. This could mean the government that emerges this week struggles with further economic reforms, and even with

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SNB sees weaker medium-term inflation

September 15, 2016

Macroview SNB likely to keep negative deposit rate until end of ECB’s asset buying programme, and focus on forex intervention to control upward pressure on franc. The Swiss National Bank (SNB) decided on September 15 to maintain its interest rate on sight deposits unchanged at -0.75%. In its quarterly monetary policy assessment, the SNB highlighted once again the Swiss franc’s overvaluation and reiterated its willingness to intervene on the foreign exchange market if needed. The central bank revised down its forecasts for inflation in Switzerland in 2017 (from 0.3% to 0.2%) and 2018 (from 0.9% to 0.6%), owing to global economic uncertainties. Its inflation forecast for 2016 remained unchanged at -0.4%. Following better-than-expected growth in the second quarter, and upward revisions for

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Strong Swiss growth lessens chance SNB will act

September 13, 2016

Macroview Stronger-than-forecast growth means the central bank is unlikely to alter monetary policy this month Switzerland: Real GDP Growth Swiss real GDP growth data surprised on the upside in Q2, expanding by 0.6% q-o-q (and 2.5% q-o-q annualised). In addition, growth in the three previous quarters was revised significantly higher. As a result, our GDP growth forecast for growth in Switzerland rises mechanically from 0.9% to 1.5% for 2016. GDP breakdown by expenditure component was less upbeat than the headline number and underlying growth dynamics remain broadly weak. (For example, household spending stagnated during the second quarter, fixed investment fell and export performance was patchy). Nevertheless, even accounting for some weakening in growth in Switzerland in the second half,

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Strong Swiss growth lessens chance SNB will act

September 13, 2016

Macroview Stronger-than-forecast growth means the central bank is unlikely to alter monetary policy this month Swiss real GDP growth data surprised on the upside in Q2, expanding by 0.6% q-o-q (and 2.5% q-o-q annualised). In addition, growth in the three previous quarters was revised significantly higher. As a result, our GDP growth forecast for growth in Switzerland rises mechanically from 0.9% to 1.5% for 2016. GDP breakdown by expenditure component was less upbeat than the headline number and underlying growth dynamics remain broadly weak. (For example, household spending stagnated during the second quarter, fixed investment fell and export performance was patchy). Nevertheless, even accounting for some weakening in growth in Switzerland in the second half, the carryover effect from the

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Spain to end its political gridlock?

August 30, 2016

Spain will try to break its nine-month political stalemate this week. Two months after the second round of general elections in Spain on 26 June, no government has been formed. Mariano Rajoy, the Popular Party (PP) leader and caretaker prime minister has been nominated by the king to head the government. The investiture debate will start on August 30, with a confidence vote on August 31. If unsuccessful, a second vote will be held on September 2, with a lower threshold for success (simple majority).Given recent statements by political leaders, the chances that Rajoy will garner enough support to win the first or the second confidence vote in Congress are very low. If no PM is elected within two months of the first confidence vote, parliament will be dissolved and new general elections

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Euro area credit flows prove resilient

August 26, 2016

Euro area bank credit flows were pretty strong in July, despite concerns about the impact of the 23 June Brexit referendum and banks’ health. In July, bank credit to euro area non-financial corporations (NFCs) accelerated, to EUR 12bn (adjusted for sales and securitisations) compared with a rise of EUR 8bn in June and EUR 10bn in May. Lending to NFCs seems to be stable, and on a gentle upward trend. On a country-by-country basis, core countries led the increase on loans to NFCs adjusted for sales and securitisations. In particular, France saw a decent pace of increase in July (+EUR 5.9bn), followed by Germany (+EUR 1.8bn). The increase in Spain was more moderate (+EUR 0.6bn), while Italy saw a decline (-EUR 2.6bn). Credit to households increased as well (+EUR 9bn), although at a slower

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Euro area flash PMIs show resilient activity

August 24, 2016

Yesterday’s flash purchasing managers index (PMI) surveys showed again a rather resilient picture for the euro area after the UK vote to leave the EU. The euro area composite ‘flash’ PMI index posted a marginal increase from 53.2 in July to 53.3 in August, slightly above consensus expectations (53.1) and reaching a seven month high. The sector breakdown showed that the services sector index increased from 52.9 in July to 53.1 in August, above consensus expectations (52.8). By contrast, the manufacturing PMI fell marginally (-0.2 to 51.8).Looking at the breakdown by sub-indices, the main culprit for weak manufacturing activity was new orders and employment falling on the month. The output index remained unchanged. As for services sectors, despite the increase in the headline index,

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Euro area growth slowed as expected in Q2

July 29, 2016

Growth in the euro area fell to 0.3% in the second quarter from 0.6% in the first. Nevertheless, leading indicators point to post-Brexit resilience and we are leaving our full-year forecast unchanged

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Swiss National Bank─Reactive rather than proactive

June 17, 2016

No change in base rates, but currency intervention on the cards as franc continues to strengthen Read full report here The Swiss National Bank (SNB) decided to leave its monetary policy unchanged at its quarterly meeting on 16 June. The main messages…

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Eurogroup deal relieves pressure on Greece

May 25, 2016

The deal should help Greek banks and bonds, but major questions on Greek debt relief were postponed and Greece’s economy remains in the doldrums Read full report here In the early hours of May 25, the Eurogroup, made up of euro area finance ministers…

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Deflationary pressures slacken in the euro area

April 22, 2016

We continue to forecast a gradual pick-up in the pace of economic expansion from 1.5% in 2015 to 1.8% in 2016, largely led by domestic demand. Read the full report here According to Markit’s preliminary estimates, the euro area composite PMI decrease…

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Core euro area inflation surprises on the upside

March 31, 2016

Headline inflation was negative for the second consecutive month in March, but core inflation rose above consensus. We expect underlying inflation dynamics will remain subdued this year and it will take time to judge the effectiveness of the ECB’s la…

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Credit figures confirm our 2016 euro growth forecast

March 29, 2016

Strong money-supply growth in February enables us to maintain our forecast for euro area real GDP growth unchanged at 1.8% in 2016. Euro area bank credit flows increased again in February, in line with other indicators such as the ECB’s Bank Lending …

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Spain: new elections increasingly likely

March 3, 2016

If Pedro Sanchez loses tomorrow’s confidence vote, and if political parties fail to form a new government over the next two months, new general elections would be called. Risks to the recovery may surface if political uncertainties remain entrenched.

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Switzerland: Fourth quarter GDP surprises on the upside

March 2, 2016

According to SECO’s estimate, Swiss real GDP expanded by 0.4% q-o-q (1.7% q-o-q annualised, 0.3% y-o-y) in Q4, much better than consensus expectations (0.1%). Swiss GDP surprised on the upside in Q4, driven by robust consumption. Looking ahead, our s…

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