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U.S. central bank Fed adjusts to data-dependence (Martin Ertl)

19 Mär

Martin Ertl

Mixed data signals magnify uncertainty about the state of the U. S. business cycle.On Wednesday, the Fed is unlikely to change its growth and inflation outlook significantly, however, it will be interesting seeing how its expectations about policy changes evolve. After a solid economic expansion until the end of last year (real gross domestic product increased by 2.4 % in Q4), the expectations for the current quarter growth have gradually diminished. Real-time GDP estimates from the Atlanta and New York Fed signal growth of meagre 0.4 % and 1.4 % (q/q, annualized rate) for Q1 2019. Other coincidence indicators (for example, the leading indicator of the Conference Board) or forward-looking surveys, like the ISM manufacturing survey, confirm slowing economic momentum (Figure 1). In January, growth in nation...     » Weiterlesen


Romanian economy at a crossroads (Martin Ertl)

04 Mär

Martin Ertl

Economic growth slowed to 4.1 % in 2018 and is now more consistent with Romania’s longer-term growth potential.Increasing reliance on household consumption makes Romania’s growth structure rather unbalanced.Household consumption is fueled by a tight labor market and substantial gains in real wages. Yet, productivity growth cannot keep up with rising labor costs deteriorating Romania’s international cost competitiveness.The current account deficit has widened lately and the stock of foreign currency reserves, though remaining stable above 30 bn Euro, is declining relative to imports and short-term external debt.Romania is among the poorest countries within the European Union. The purchasing power of Romanian households is only 48 % of the Austrian level and 58 % of the EU28 average. Only B...     » Weiterlesen


Germany’s growth outlook and CEE’s resilience (Martin Ertl)

20 Feb

Martin Ertl

Germany’s growth outlookEconomic growth slowed significantly in H2 2018.A foregone opportunity: We discuss Germany’s lack of public investment.Germany’s real gross domestic product (GDP) stagnated during the last quarter of 2018 after it had declined by 0.2 % (q/q) in the previous quarter. In seasonally-adjusted terms, the year-on-year growth rate decreased to 0.6 % (after 1.2 % in Q3 and 2.0 % during H1 2018). Annual GDP growth slowed from 2.5 % in 2017 to 1.5 % last year. In non-seasonally adjusted terms, the annual growth rate of GDP was 1.4 % and, hence, slightly lower than reported in January (1.5 %) by the German statistics office (Destatis [1]).There were no expenditure details yet released by Destatis, however, it was noted in the press release that domestic demand contributed pos...     » Weiterlesen


Russia’s growth miracle & Czech monetary policy normalization loses speed (Martin ...

12 Feb

Martin Ertl

Russia’s growth miracle Russia’s statistics office released a large Q4 GDP growth surprise which lacks additional evidence so far.Central Bank of Russia assessing if further key rate hikes are needed to bring back inflation to the target. According to the release from the Russian State Statistics Service (Rosstat), the real gross domestic product increased by 2.3 % in the total of 2018 posting a big growth surprise against previous expectations around 1.7 % GDP growth and growth of 1.6 % in 2017. The rise was not predictable and does not match the numbers of the quarterly GDP releases for Q1-Q3. Rosstat did not yet revise quarterly GDP and the annual growth rate implies that Q4 GDP increased by 6.6 % (q/q, non-seasonally adjusted) and 3.8 % (y/y) (Figure 1). In Q3 y/y-growth was only 1.5 % and ...     » Weiterlesen


Fed patiently awaits greater clarity, Euro Area: No growth rebound occurred in Q4...

04 Feb

Martin Ertl

Fed patiently awaits greater clarityFed shifts to wait-and-see approach regarding future policy changes.Case for raising rates has weakened somewhat as inflation pressure muted and downside risks to an overall solid economic outlook intensified.January labor market report shows a strong job picture with the unemployment rate near historic lows and strong wage gains.Balance sheet normalization might be reached sooner rather than later, though, no comments were made about the equilibrium size.Last week the Federal Open Market Committee (FOMC) has made substantial changes to its monetary policy statement. In a nutshell, the FOMC has signaled to shift to a wait-and-see approach regarding future changes in its monetary policy rate. Whether the Fed will further increase the federal funds rate in 2019, as indicat...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

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