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Russia: How resilient is the economy to financial sanctions? (Martin Ertl)

16 Apr

Martin Ertl

While the recovery has been weak, we have been arguing that Russia gained in macroeconomic stability in recent years.Financial shock-absorbing factors include low inflation and the transition to a new monetary policy framework, rebuilt FX reserves, a prudent fiscal rule and a consumption-driven recovery. In a surprise action, on Friday 6th April, the US Office of Foreign Assets Control (OFAC) designated Rusal, a Russian corporate issuing foreign currency denominated bonds, as a specially designated national (SDN). US persons holding debt and equity in the company must sell its holdings until 7th May 2018. How resilient is the macroeconomy to financial shocks such as the tightening in foreign currency financing conditions? Higher firm borrowing cost lower investment and employment. Currency depreciation ind...     » Weiterlesen


CEE and the global economy: The big picture (Martin Ertl)

10 Apr

Martin Ertl

The global economic expansion is in full swing and accompanied by intensifying world trade.The growth outlook for the United States has brightened, also due to the tax reform, and the Euro Area is continuing its recovery.CEE remains Europe’s growth engine with GDP growth of 4.4 % in 2017 (y/y, excluding Russia).Monetary policy continues to be accommodative despite of a gradual normalization. In 2017 we have seen the broadest synchronized global upsurge since 2010. The global economy expanded by 3.7 % (y/y) and according to the IMF’s latest update of its World Economic Outlook, global growth will be even higher, at 3.9 % (y/y), in 2018 and 2019. The prolonged growth momentum is supported by growing international trade. Growth in the volume of global trade has accelerated from 1.5 % in 2016 to 4...     » Weiterlesen


The US Fed, its Taylor rules, the natural rate of interest and term premia (Martin...

26 Mär

Martin Ertl

USA: The US central bank Fed hiked the key interest rate last week, as expected.Taylor rules seem overall in line with the rate hiking cycle.The natural rate of interest and term premia shed some light on understanding the Fed projections. The market implied risk-neutral 10Y treasury yield is at 3.2 %. The term premium remains negative.The Federal Open Market Committee (FOMC) of the US central bank Fed decided last week to raise the target range by 25 basis points to a range between 1.5 and 1.75 %. It was the sixth hike of the federal funds rate since the Fed embarked on an interest rate hiking cycle in December 2015 and the move was broadly anticipated.Since the FOMC met in January, the labor market has continued to strengthen and economic activity has been rising at a moderate rate. Job gains have been s...     » Weiterlesen


Austria: Productivity growth without wage growth? (Martin Ertl)

19 Mär

Martin Ertl

Hourly nominal wages and salaries rose by 2.3 % in 2017.However, wages and salaries have remained flat since 2016, when adjusted for inflation.Hourly labor productivity, on the other hand, has picked up with average growth close to 5 %.Nevertheless, since the financial crisis Austrian real hourly wage growth has been among the fastest in Europe. In 2017, the growth in hourly wages and salaries has accelerated. Austrian businesses have paid 2.4 % higher hourly wages and salaries in 2017, compared to growth of 0.9 % in 2016. Wage growth is, however, less dynamic as it might seem. The fourth quarter of 2017 shows weaker growth than the two preceding quarters. Moreover, looking further back in time, makes clear that nominal wage growth is still below growth rates seen in the 2013-2015 period (average of 3 %).L...     » Weiterlesen


Decomposing subdued inflation in the Euro Area (Martin Ertl)

05 Mär

Martin Ertl

Euro Area inflation has remained broadly unchanged in February with core inflation at 1 %.The historical average of core inflation is 1.4 % (1999-) and 1.6 % during the pre-crisis period.Lower than average inflation in services is the underlying factor of subdued inflation post 2017.Additional support from non-core components is needed for the ECB to fulfil its inflation target. Last week Eurostat has released its flash estimate for Euro Area inflation for February 2018. Euro Area inflation was reported at 1.2 % (y/y) compared to 1.3 % in January. The flash estimate attributes the decline in inflation to slower price growth within the category food, alcohol & tobacco (1.1 %, y/y). Energy prices increased by 2.1 % (y/y) and core inflation, which excludes the categories energy and food, alcohol & tob...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

>> http://uniqagroup.com/gruppe/