Commentary: Investment Clock – A pivotal October
By Trevor Greetham in London
An astonishing 97% of global stock market returns since 1973 have accrued during the seven months from October to April. Volatility also tends to peak in October, underlined by famous crashes in 1929, 1987 and 2008. Cross-currents in the world economy are causing volatility again this October as financial markets engage in a tug of war between good news coming out of the US and bad news out of China. Investor...
Angela Merkel
Commentary: Merkel setback hurts EMU reform odds
By David Marsh in Bali
The stunning setback for Germany’s coalition parties in Sunday’s Bavarian state elections will toughen Chancellor Angela Merkel’s already difficult task of winning consensus for reforming and strengthening the structure of European economic and monetary union. The Bavarian debacle will narrow further Merkel’s room for policy manoeuvre both over budgetary squabbles with Italy and over the wider issue of...
Commentary: Global momentum abating
By David Skilling in Singapore
The global economy is slowing, and headwinds are unlikely to disappear soon. But looking across small advanced economies – helpful indicators for the health of the world economy – suggests this is more a moderation in economic momentum. The general resilience of these economies suggests the global recovery remains in good shape, even if it is not as synchronised or strong as at the start of 2018.
A decade on from the collapse of...
Commentary: Central banks’ balancing act
By Veerathai Santiprabhob in Bangkok
Independence is one of central banks’ most important attributes, but the way they exercise this has evolved. To navigate the impact of globalised financial conditions, central banks will need to revisit their policy frameworks. Business models, consumer demand and production processes must contend with changing demographics and widening inequality gaps. With the need to address structural transformation, central...
http://www.allaboutshipping.co.uk/2018/10/11/central-banks-balancing-act-all-eyes-on-asia-bulletin/
Botswana, Kenya and Nigeria have moved up the Absa Africa Financial Markets Index, produced by OMFIF, and South Africa remains in top position, supported by strong financial market infrastructure and a robust legal framework.
However, South Africa’s macroeconomic performance has deteriorated over the past year. Notably, the country no longer tops the index across all six pillars as it did in 2017, having been overtaken by Kenya on ‘access to foreign exchange’ and by Nigeria in ‘market...
Commentary: ECB faces QE dilemma
By Marchel Alexandrovich in London
While Italy continues to dominate the headlines, the European Central Bank is more interested in the big picture: the continuing economic recovery, building inflationary pressure, the end of quantitative easing and guiding interest rate expectations. As its bond-buying programme starts to wind down, the ECB is increasingly relying on the flow from QE reinvestments to make its presence felt in the markets. The uneven nature of...
Commentary: Euro will not survive if Italy fails
By Desmond Lachman in Washington
An Italian debt default would trigger a European banking crisis with global economic and financial market ramifications. Italy is the euro area’s third largest economy. If it fails, the single currency cannot survive. It is also too costly for its European partners to save. However, the country’s new populist government is engaging in wishful thinking that somehow the country will grow its way out of its debt...
Commentary: End of the ‘flat world’
By David Skilling in Singapore
A few years before the 2008 financial crisis, journalist Tom Friedman captured the zeitgeist with his argument that ‘the world is flat’, that all competitors in the global economy have an equal opportunity to succeed.
But if it was once possible to argue that (Western-led) politics and technology were creating a flat world, today they are combining to create a more lumpy, multipolar system. Developments in North America, Europe...
http://www.allaboutshipping.co.uk/2018/10/05/end-of-the-flat-world-city-lecture-with-james-bullard/
Commentary: Fed moves to a hawkish consensus
By Darrell Delamaide in Washington
At the Federal Reserve, the doves are flocking to the hawk side of the perch as a consensus grows that policy-makers should temper robust US growth with a steady increase in interest rates, reflecting strong growth, low unemployment and inflation approaching the Fed’s 2% target.
The 16 members of the Federal Open Market Committee have raised their expectations for US growth both this year and next, with Fed presidents...
Commentary: Overcoming fragmenting geopolitics
By Mark Sobel in Washington
The IMF’s expert staff, surveillance and technical assistance are important public goods, as is its machinery for international financial co-operation. Financial crises will remain endemic. In those moments, even the most reluctant shareholders will turn to the Fund to be the first respondent. Out of self-interest they will ensure that the IMF has the resources to do its job. The Fund’s greatest challenges come foremost...
http://www.allaboutshipping.co.uk/2018/09/28/overcoming-fragmenting-geopolitics-omfif-at-the-imf/