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The economic growth figure we are now forecasting for 2015 is a tad disappointing. In the industrialised countries, activity may be accelerating more or less everywhere relative to 2014, but it is hesitant. In the advanced economies, the markets continue to benefit from a very upbeat environment. However, new doubts have emerged, this time focused on the emerging countries, starting with the biggest, China.
This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
Highlights: Ukraine has a historic window of opportunity for its reforms... The Middle East will see a current account deficit in 2015. The rand tumbles in South Africa. (Tales from) China: the level and the trend... In Brazil, how far can the real fall?
The FY 2016 budget will not be passed before the beginning of the fiscal year. The responsible solution would be to pass a short-term continuing resolution (CR) to maintain funding for current government programs at the same pace as this year until an agreement can be reached. Some hard-core conservative Republicans favor a shutdown to make a political point. We believe the odds favor a last-minute short-term spending bill to avert a shutdown.
With its announcement of an extended programme of purchasing unsterilised assets (quantitative easing, QE), ECB seems to have come up with a response on a par with the challenge. To gauge the effectiveness of these measures, we have developed a QE impact indicator. The indicator uses a range of monetary and financial variables describing the activation of the various monetary policy transmission mechanisms.
Financial market turbulence that originated in China has led to tighter financial market conditions (lower equities, stronger dollar), which could hamper progress towards the Fed's growth and inflation mandates.
Q2 real GDP growth rose at a 2.3% annual rate, following an upwardly revised 0.6% increase in Q1, while the PCE deflators showed a pickup in Q2 inflation rates. Stronger consumer spending and an improved net export position fuelled the Q2 GDP advance. Residential investment moved higher but fixed non-residential capex spending on equipment pulled back last quarter. We see GDP growth averaging around 2.8% in the second half.
Edition September 30, 2015
ECB's inflation forecasts appear too optimistic
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