Renzi may shift EU macroeconomic narrative

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Member State ◽  
Public Investment ◽  
Policy Coordination ◽  
State Governments ◽  
European Policy ◽  
Fiscal Stimulus ◽  
Content Type ◽  
Policy Strategy ◽  
The Government

Subject Renzi's bid for more growth-friendly policies. Significance In its paper, 'A shared European policy strategy for growth, jobs, and stability', the Ministry of the Economy and Finance (MEF) sketches a plan to create more flexibility in EU macroeconomic policy coordination. The immediate goal is to enable member-state governments to use more fiscal stimulus and public investment to boost growth. Impacts If Renzi's constitutional reforms do not go through in October, the government will be in disarray. The ECB is likely to ease policy further tomorrow, while reminding markets that monetary policy accommodation is insufficient on its own. The March 17 European Council summit will be Renzi's chance to reframe the macroeconomic conversation.

German foreign policy will struggle under coalition

2021 ◽  
Keyword(s):  
Foreign Policy ◽  
National Security ◽  
Public Investment ◽  
Policy Coordination ◽  
Main Concern ◽  
Security Strategy ◽  
Content Type ◽  
National Security Strategy ◽  
The Government ◽  
The Eu

Significance On foreign policy, the three parties are rhetorically committed to adopting a tougher stance towards China and other authoritarian countries. However, they differ on what this might involve and the relative threats posed by China and Russia. To enhance foreign policy coordination, in an unprecedented three-party coalition, they have agreed to draft a national security strategy. Impacts EU approval of the investment deal with China will not progress until China ends anti-EU sanctions, which seems unlikely. Climate change is now the main concern for German voters, which will put pressure on the government to take appropriate measures. Germany’s policy towards public investment and fiscal policy will be less dogmatic, both domestically and at the EU level.

Czech monetary policy will shift in 2017

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Short Term ◽  
Fiscal Stimulus ◽  
The Czech Republic ◽  
Content Type ◽  
East European ◽  
Main Driver ◽  
Low Levels ◽  
The Government ◽  
Growth Deceleration

Subject The outlook for Czech monetary policy. Significance With second-quarter GDP growth slowing to 2.5% year-on-year, the Czech Republic is no longer the fastest-growing Central-East European (CEE) economy. The cyclical upswing that characterised the Czech economy from early 2014 has come to an end. Growth is foreseen to decelerate further in the quarters ahead, owing to unfavourable base effects and a larger-than-expected drop in EU-funded investment and manufacturing inventories. The government is thus expected to introduce short-term fiscal stimulus measures to support consumption. Impacts CEE central banks are expected to hold their rates at current historically low levels for the next quarter at least. Without room for further cuts, few will consider rate tightening before Q1 2017, when the ECB will start winding down quantitative easing. Growth deceleration in the second half of 2016 will necessitate fiscal stimulus by the government ahead of the 2017 general election. Further rises in nominal wages and a firmer labour market will bolster purchasing power, with private consumption the main driver of growth.

German shift on austerity would risk 'wrong' lessons

2015 ◽  
Keyword(s):  
Euro Area ◽  
Credit Rating ◽  
Bond Yields ◽  
Trade Surplus ◽  
Fiscal Stimulus ◽  
Content Type ◽  
Black Spots ◽  
Angela Merkel ◽  
Deficit Financing ◽  
The Government

Significance Chancellor Angela Merkel faces a rising tide of euro-area members in favour of a policy shift away from austerity and possibly towards more favourable debt deals for euro-area black spots. Adding to the pressure for change, her own voters may prefer a slower pace of debt reduction: German government debt has already been falling as a percentage of GDP -- from over 80% in 2010 to under 77% at the end of 2014 -- and debt is starting to fall in absolute terms as well. The government has delivered enough stabilisation (ie, austerity) and growth to tame the 2009-10 debt surge and maintain its AAA credit rating, but is now over-achieving in terms of its own tough targets because the greater-than-expected fall in debt interest costs is pushing the budget into surplus. Some modest spending adjustments look likely to curb this windfall surplus, yet many will argue that more could be done to re-energise the sluggish economy -- and boost the euro-area. Impacts The plummeting euro will provoke another rise in German exports (already near 50% of GDP) and tensions over Germany's bulging trade surplus. While a fiscal stimulus and/or higher wage payments could address these tensions and raise imports, there is no sign of such action. Germany's critics are gathering support to end austerity, to the point of ignoring the risks of deficit financing and reneging on debts. Ultra-low German bond yields, encouraged by the prospective supply fall, are dragging down euro-area yields, delivering wider benefits.

Monetary easing may quicken in Brazil this year

2017 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Economic Recession ◽  
Government Debt ◽  
Domestic Demand ◽  
Private Debt ◽  
Content Type ◽  
Positive Effects ◽  
The Government

Significance At its first meeting of 2017, on January 10-11, the COPOM reduced the benchmark Selic interest rate to 13%. The 75-basis-point (bp) rate cut decision, the largest in nearly five years, accelerated the monetary easing cycle that started in October 2016. Economic recession has been relieving inflationary pressures and opening room for more intense cuts in interest rates. Impacts Further reductions of interest rates may contribute to controlling government debt. Private debt renegotiations at lower interest rates may facilitate a recovery in domestic demand and output. Any positive effects of monetary policy on activity may help contain popular dissatisfaction with the government.

Chinese state land ownership speeds up development

2015 ◽  
Keyword(s):  
Local Governments ◽  
Land Ownership ◽  
Easy Access ◽  
Property Development ◽  
Fiscal Stimulus ◽  
Content Type ◽  
Land User ◽  
Perverse Incentives ◽  
Near Term ◽  
The Government

Subject State land ownership and the implications for development in China. Significance The government owns all land in China -- one of the reasons that the country claims still to be a 'socialist' state, despite the role of markets in most areas of the economy. A de facto land lease system has emerged in which land 'use rights' are traded. However, the rights of the owner -- the state or local government -- take precedence over the rights of the land user. As a result, requisitioning land for infrastructure or property development is much faster than in countries with a genuine land market. Impacts In the near term, local authorities' easy access to land will make infrastructure-based fiscal stimulus measures faster to execute. The tight timeframes of China's urbanisation goals are more plausible given the government's powers over land. Local governments' power to expropriate land creates perverse incentives and opportunities for corruption. Reforms to make the system more market-oriented are likely in the long term, but will be gradual.

Mexican fiscal consolidation steady despite oil price

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Oil Prices ◽  
Oil Price ◽  
Fiscal Consolidation ◽  
Significant Drop ◽  
Content Type ◽  
The Government

Subject The outlook for fiscal consolidation. Significance The significant drop in oil prices should not derail the fiscal consolidation trajectory mapped by President Enrique Pena Nieto's administration, which envisages that the debt/GDP ratio should stabilise by 2017. The fiscal hole opened by reduced oil prices has been compensated with greater taxation income and one-off revenues. Impacts Defying expectations, the oil price plunge did not push the government into an overtly contractionary fiscal correction. An arguably much-needed simplification of the cumbersome taxation regime will not take place due to the government's pledge not to alter it. Loose monetary policy from the autonomous central bank has worked in tandem with the government's fiscal stance.

Vietnam eyes PPPs to plug infrastructure gap

2015 ◽  
Keyword(s):  
Public Investment ◽  
Infrastructure Investment ◽  
Private Capital ◽  
Content Type ◽  
Infrastructural Development ◽  
Eurasian Economic Union ◽  
New Public ◽  
The Government ◽  
To Come ◽  
Asean Economic Community

Subject The emerging infrastructure investment framework in Vietnam. Significance Vietnamese infrastructure lags some regional competitors; Hanoi estimates that investing 500 billion dollars could resolve this, but needs 300 billion of this to come from public-private partnerships (PPP). Following problems with Vietnam's PPP regulatory framework, a new framework was introduced in April and a new public investment law in January, among other measures seeking to attract private capital into national infrastructure. Such measures are timely: the ASEAN Economic Community is coming in late 2015, while Vietnam signed a free trade deal on May 29 with the Eurasian Economic Union; capitalising on both requires Vietnamese infrastructural development. Impacts The government may need to delay some projects while private capital comes online. As government and industry adapt to the new infrastructure investment framework, updates to planning instructions may be needed. A concerted anti-corruption campaign would support efficiency drives in infrastructural development, but progress will be slow.

Watershed Thai election is unlikely

2017 ◽  
Keyword(s):  
Foreign Policy ◽  
Prime Minister ◽  
Public Investment ◽  
Content Type ◽  
Popular Appeal ◽  
The Government ◽  
The Military

Significance The next election will be the first since the military, led by then general, now Prime Minister Prayuth Chan-ocha, deposed Yingluck Shinawatra’s administration in May 2014. Impacts The prime minister’s Washington visit later this month will be portrayed as a pre-election display of foreign policy strength. The government will increase public investment for the remainder of this year, at least. This, it hopes, will maintain economic momentum, and strengthen the junta’s popular appeal. The post-election possibility of fresh political interventions by the military will concern investors.

Australia will seek foreign infrastructure money

2019 ◽  
Keyword(s):  
Population Growth ◽  
Foreign Investment ◽  
Foreign Investor ◽  
State Governments ◽  
Foreign Investors ◽  
Content Type ◽  
Competitive Disadvantage ◽  
The Government ◽  
Budget Surplus ◽  
Tax Cuts

Significance Tax cuts were announced earlier this month for foreign investment in infrastructure, including transport, energy, water and communication. The move follows concerns that spending on infrastructure is too low for Australia’s projected population growth. Impacts The stimulus does not involve any new spending and will require the support of state governments, which co-fund some projects. Tax concessions will help ease a competitive disadvantage faced by foreign investors, but there will still be market barriers. Uncertain confidence in the current government could depress foreign investor interest. If it maintains the budget surplus, the government will keep backbenchers’ support.

US 'open' Fed aim could suffer under Trump

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Policy Tools ◽  
Content Type ◽  
Research Conference ◽  
Policy Strategy ◽  
Communication Practices ◽  
One Year

Significance The scheme is part of a year-long review of Fed monetary policy strategy and tools, and communication practices, with a research conference canvassing views about Fed policy tools and responsiveness to citizens’ views coming in early June. Impacts Herman Cain, Trump or both could decide to discontinue Cain’s Fed board nomination. Stephen Moore’s chances of nomination to the Fed board seem stronger; he will probably be confirmed. If Trump is re-elected, he could decide not to nominate the current Fed chair again in 2022. The Fed’s one-year review could see it augment the range of economic metrics it uses.

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