The results of the latest Bank Lending Survey by the ECB look slightly less negative to us than what could have been expected, pointing to growing demand- and supply-driven constraints on bank credit, but not to a broad-based credit crunch. Commercial banks expect a ‘sizeable' drop in loans to households for house purchases, but this is a typical lagging indicator and the outlook for loans to Non-Financial Corporations looks less worrisome.
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Since the beginning of the Greek crisis in late 2009, it has become increasingly common to compare Greece today with Argentina's situation ten years ago. Given Argentina's post-crisis economic recovery, some go as far as to predict, or even recommend, that Greeks opt for an identical shock therapy by exiting from the euro zone, reintroducing a severely devalued national currency and going into a unilateral default. Nevertheless, comparisons are often misleading. We see several major differences that make the Greek situation unique and that require extreme caution when considering the best remedy to be used to end the crisis.
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The West is facing a crisis that is mutating. In the beginning, excess debt in the private sector triggered a balance-sheet recession; then the decline in growth, in an environment of too loose fiscal policy management for too long, set off the sovereign crisis, which has compounded the mistrust in banks. In any case, economic policy "room for manoeuvre" (in the usual acceptance thereof) is limited. Over the next year, fiscal policy's ultimate goal will be the reduction of the public debt to GDP ratio; the only flexibility is perhaps the mix of short-term stimulus and a strong commitment in the medium term to orthodoxy from countries still benefiting from ample and stable government market liquidity.
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The 1997 crisis has been steep. Forced to reform, the Indonesian economy has won in stability since then. The way it surmounted the 2009 global crisis without too much difficulty shows it. This should provide reassurance in a degraded international environment. Indonesia's economy is expected to grow by just under 6.5% this year, and could grow by around 5.5% in 2012. In the medium and long term, the country has significant potential. Demography is an undeniable source of economic vitality-provided GDP growth becomes more inclusive, which would call for dealing with shortcomings in education, infrastructures and governance, despite doubts in light of the political context. Still, Indonesia should nonetheless be able to join the BRICs within the next ten years.
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This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
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