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The recovery, which was restricted to the US and UK only a few months ago, is now definitely spreading to other countries. The growth upticks in the Eurozone and Japan differ from the cruising speed now achieved in the US. First off, they are far more modest. They are also more fragile, as they owe a great deal to the drop in oil prices. Another support factor, this time linked more to economic policies, is the relative strength of the US dollar.
This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
What is at stake in the near-term for Greek authorities is to secure financial support to meet a tight repayment schedule which implies to step backwards on several campaign promises while maintaining its support home. But what is at stake for Greek people in the longer term is to find a lasting solution for the debt problem which does not stake a claim on future growth prospects.
The Russian crisis is spreading to the French economy via several trans¬mission channels. Foreign trade is affected, of course. Conversely, direct investment flows seems slightly affected by the situation. Another effect will spread via a deterioration in confidence levels and more marked wait-and-see agent behaviour. Nor should we forget that, although it did not trigger the crisis, the oil price fall has acted as an accelerator in the Russian crisis.
The take-up at today's TLTRO exceeded expectations, with 143 banks borrowing an extra EUR97.8bn from the ECB. TLTRO will help expand the ECB's balance sheet at the margin but, more importantly, they will contribute towards improving monetary policy transmission and to lower borrowing costs even further. We continue to look for a stronger pick-up in Eurozone bank lending in the coming months.
From a macro perspective, yesterday's biggest surprise came from the upbeat revisions to medium-term ECB staff forecasts, with 2017 GDP (2.1%) and HICP (1.8%) median projections reflecting a high degree of confidence over the impact of QE on financial markets and the economy. However, it must be noted that, as a result of a change in methodology, the 1.8% forecast for 2017 HICP incorporates the full expected impact of monetary-easing measures for the first time ever.
Highlights: EU aid continues to rise in Central Europe. The rating agencies have modified their analysis of Russia. 2015 will be more favourable for Morocco. Currency depreciation was fairly widespread in Sub-Saharan Africa in 2014. In China, inflation saw a further fall in January. In Mexico, oil production and the public accounts are adrift.
Edition April 1, 2015
Oil and exchange rate
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