Prospects for the euro-area in 2019

2018 ◽  
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Euro Area ◽  
World Trade ◽  
Content Type ◽  
The Face ◽  
The Eu

Subject Prospects for the euro-area in 2019. Significance The improvement in economic growth registered across most of the EU in 2017 fizzled out in 2018, linked to the stalling of world trade as well as an increase in inflation. Within the EU, individual governments are heading in different economic policy directions as some attempt to meet deficit and debt reduction targets despite voter disapproval while others are pressed by austerity-weary voters into disregarding fiscal targets in the face of high debt.

The international strength of the euro will grow

2021 ◽  
Keyword(s):  
Euro Area ◽  
Financial Services ◽  
Raw Materials ◽  
Domestic Demand ◽  
Content Type ◽  
The Us ◽  
Us Dollar ◽  
Strategic Autonomy ◽  
Geopolitical Risks ◽  
The Eu

Significance The proposals identified areas where the euro could potentially become more dominant, such as the issuance of green bonds, digital currencies, and international trade in raw materials and energy. Ambitions to enhance the international leverage of the euro are being driven by the aim to strengthen EU strategic autonomy amid rising geopolitical risks. Impacts Developing its digital finance sector would be an opportunity for the EU to enhance its strategic autonomy in financial services. Challenging the US dollar would require the euro-area to rebalance its economy away from foreign to domestic demand. Member state division will prevent the economic reconfiguration the euro-area needed to make the euro a truly global currency.

EU bonds will rival German Bunds as a safe asset

2021 ◽  
Keyword(s):  
Euro Area ◽  
Safe Haven ◽  
Content Type ◽  
The World ◽  
The Creation ◽  
Over Time ◽  
The Eu

Significance This could create an alternative benchmark safe-haven asset to rival German Bunds within the region. As part of its issuance plans, the EU intends to issue at least EUR50bn in green bonds annually, which is likely to make it the world’s largest issuer of these bonds. Impacts The increased importance of EU bonds over time will help to support the euro's value and could eventually put pressure on the dollar. The EU is leading the world in green bond issuance, but the risk of spurious environmental claims (‘greenwashing’) must be managed. The creation of new EU bonds will help reduce the funding costs of riskier euro-area members such as Italy.

Geopolitical risk, economic growth, economic uncertainty and international inbound tourism: an Indian Illustration

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sudeshna Ghosh
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Trade Openness ◽  
Policy Uncertainty ◽  
Tourism Demand ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Long Run ◽  
Geopolitical Risks

Purpose This paper aims to consider the role of geopolitical risk in explaining tourism demand in India, a major tourist destination of the Asian region. Furthermore, the study also considers how in addition to geopolitical risk, economic policy uncertainty, economic growth, exchange rate, inflation and trade openness impact tourism demand. Design/methodology/approach The Bayer and Hanck (2013) method of cointegration is applied to explore the relationship between geopolitical risk and tourism demand. Furthermore, the study has also used the auto distributed lag model to determine whether there is a long-run cointegrating association between tourism demand, geopolitical risk, economic policy uncertainty, economic growth, exchange rate and trade openness. Finally, the vector error correction model confirms the direction of causality across the set of the major variables. Findings This paper finds that geopolitical risk adversely impacts inbound international travel to India. This study also obtains the consistency of the results across different estimation techniques controlling for important macro variables. The Granger causality test confirms the unidirectional causality from geopolitical risk to tourism and further from economic uncertainty to tourism. The findings from the study confirm that geopolitical risks have long-term repercussions on the tourism sector in India. The results indicate that there is an urgent need to develop a pre-crisis management plan to protect the aura of Indian tourism. The tourism business houses should develop skilful marketing strategies in the post-crisis to boost the confidence of the tourists. Research limitations/implications This paper provides valuable practical implications to tourism business houses. The tourism business houses can explore geopolitical risk measure and economic policy uncertainty measure to analyse the demand for international tourism in India. Further, the major stakeholders can establish platforms to help tourists to overcome the fear associated with geopolitical risk. Originality/value This study is the first of its kind to explore the geopolitical risks and their long-run consequences in the context of tourism in India. The study puts emphasis on the role of national policy to maintain peace otherwise it would be detrimental to tourism.

Greece to seek end of austerity, not euro membership

2015 ◽  
Keyword(s):  
Public Sector ◽  
Euro Area ◽  
Economic Hardship ◽  
Debt Relief ◽  
Credible Commitments ◽  
Content Type ◽  
Political Constraints ◽  
Greek Government ◽  
Domestic Political Constraints ◽  
The Eu

Significance Greece's government and voters have delivered a punishing blow to euro-area policies. However, the underlying dilemmas remain unchanged: whether creditors will countenance debt relief, whether the Greek government can produce credible commitments on reform, and whether euro-area leaders can manage their domestic political constraints and divisions. Impacts Without European assistance, Greece faces a period of economic hardship as funds dry up to pay public-sector salaries and pensions. Without ECB liquidity injections to keep the banks operational, they will require recapitalisation. A bail-in of depositors is possible. Otherwise, a raft of bankruptcies is expected among businesses unable to acquire operational financing. The referendum result will encourage anti-austerity eurosceptics elsewhere in the EU.

US rates may rise but economic risks are rising faster

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Sovereign Debt ◽  
Emerging Market ◽  
Content Type ◽  
Political Risks ◽  
Bond Yield ◽  
Treasury Bond ◽  
The Face ◽  
Equity Index

Subject Global equity market trends. Significance The four main US stock market indices began March at record highs, including the benchmark S&P 500 index at 2,400. Driven by expectations of stimulative and pro-business policies under the new US administration, equity markets are flying in the face of signals from the Federal Reserve (Fed) that interest rates will rise three times this year. The probability of a hike at the Fed’s March 14-15 meeting has risen above 80% on growing price pressures and stronger economic data, buoyed by hawkish comments from several Fed governors, including those who were previously dovish. Impacts Despite the post-election US bond market sell-off, around one-third of the stock of euro-area sovereign debt remains negative yielding. The gap between the two-year US Treasury bond yield and its German equivalent has widened to a record, a sign of rising monetary divergence. The euro lost 2% against the dollar in February as political risks escalated in the euro-area, centred around the French election. The emerging market MSCI equity index is 8.6% up this year, after losing 4.5% from November 9 to end-2016, a sign of higher confidence.

Economic growth will boost Portugal’s government

2018 ◽  
Keyword(s):  
Economic Growth ◽  
Political System ◽  
Tourism Industry ◽  
Economic Recovery ◽  
The Political ◽  
Turn Of The Millennium ◽  
Government Bonds ◽  
Content Type ◽  
Mediterranean Countries ◽  
The Eu

Significance Portugal is set for the best five-year period of growth since the turn of the millennium, unemployment is falling and public finances are showing positive signs. The upswing is reflected in the remarkable stability of the political system. Impacts The economic recovery is likely to drive down yields on government bonds. Centeno’s appointment as Eurogroup president will raise Portugal’s standing in the EU. Security concerns in many Mediterranean countries are likely to boost Portugal’s tourism industry.

Four disintegration risks may threaten the EU’s future

2017 ◽  
Keyword(s):  
Euro Area ◽  
Presidential Election ◽  
The Political ◽  
Economic Downturn ◽  
Political Uncertainty ◽  
National Front ◽  
Content Type ◽  
Marine Le Pen ◽  
Decisive Victory ◽  
The Eu

Subject Four European disintegration risks. Significance After the French presidential election, which saw the decisive victory of Emmanuel Macron over National Front leader Marine Le Pen, a sigh of relief could be heard in European capitals: the worse had been avoided; the EU would thrive again. This relief could be premature. At least four disintegration risks are still threatening the EU. Impacts Even though its economic prospects are positive, the euro-area remains fragile and could plunge back into chaos if left unreformed. An economic downturn would benefit Eurosceptic populist parties. The political uncertainty of a caretaker government in Germany will increase its officials' reluctance to agree to any euro-area reforms.

Haitian stability boosts aid and investment hopes

2017 ◽  
Keyword(s):  
Economic Growth ◽  
Dominican Republic ◽  
Infrastructure Investment ◽  
Content Type ◽  
Caribbean Community ◽  
Investment Plan ◽  
The Caribbean ◽  
The Eu

Subject Aid and development in Haiti. Significance On April 21, the EU announced a new aid package for Haiti. While part of this aid will be directed towards reconstruction projects, some will be allocated to the new government’s ambitious infrastructure investment plan. The scale of this plan means that the administration of President Jovenel Moise will also seek to win funding from other potential donors. Impacts While Moise's government provides some stability and leadership, it remains controversial and any mistakes could quickly trigger protests. Tenders will come under close scrutiny given heightened corruption suspicions in the wake of the regionwide Odebrecht scandal. If successfully funded, improved employment prospects could boost economic growth and relieve migrant pressure on the Dominican Republic. If US funding is reduced, Haiti could look to diversify its sources of aid, particularly within the Caribbean Community.

Divisions over EU defence integration look set to grow

2020 ◽  
Keyword(s):  
Economic Growth ◽  
National Level ◽  
Third Party ◽  
Content Type ◽  
Defence Spending ◽  
Defence Policy ◽  
Arms Exports ◽  
Security Relationship ◽  
Industry Integration ◽  
The Eu

Subject Future EU defence integration. Significance The Permanent Structured Cooperation (PESCO) and the European Defence Fund (EDF) have become key pillars of EU defence policy, but divergence between member states is increasingly making defence integration slow and limited. In addition, opposition towards third-party participation and arms exports, and uncertainty about the future EU-UK security relationship, threaten to diminish the capabilities of future EU defence projects. Impacts London’s exclusion from the EU’s Galileo project suggests Brussels does not want close UK collaboration in future EU initiatives. The EU will likely prioritise steps to enhance European defence industry integration in order to reduce duplication and overspending. National-level defence spending could stall over the coming years as a result of slowing economic growth across the euro-area.

German fiscal expansion is unlikely despite concerns

2019 ◽  
Keyword(s):  
Euro Area ◽  
Negative Effects ◽  
Content Type ◽  
Political Consequences ◽  
The Third ◽  
Defence Spending ◽  
Economic Outlook ◽  
The Eu

Significance The economy shrank by 0.1% quarter-on-quarter in April-June; further shrinking in the third quarter would mean a technical recession. Since growth is not likely to pick up much in the next two to three quarters, the economic outlook for Germany is gloomy, with potentially significant political consequences. Impacts Germany’s hard-line stance against ambitious euro-area reform is likely to become more entrenched. The implications of a German slowdown for the EU-26 will increase the chances of the ECB using unconventional policy to add stimulus. A recession is likely to have negative effects on Germany’s defence spending, despite US pressure on Berlin to contribute more towards NATO.

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