Global Economics Services
Highlights
Credit Crunch Watch:
Stress levels dropped again last week, with falls in both corporate bond spreads and mortgage spreads - although further significant compression of the latter looks unlikely, with the spread near its all-time low at just 27 basis points. For now, financial markets appear to have shrugged off the Greece-related jitters visible a few weeks ago. Meanwhile monetary conditions tightened very slightly last week, pushed by a rise in treasury yields along the whole curve
12 March 2010
Is the recovery sustainable in the US and Europe?
Following the worst recession since the 1930s, the US, UK and Eurozone economies have all now returned to positive growth. With the boost from policy stimulus and the inventory cycle peaking, however, this raises questions about the sustainability of the current rebound. The key features of the adjustments underway in these economies suggests that there will be a wide divergence in the pace of expansion over the coming two years, reflecting differences in the structural problems to be addressed and national policy responses in the wake of the crisis. While the recoveries in both the US and Europe will be relatively muted compared to recent historical experience, the US is likely to be the growth leader, reflecting the more dynamic nature of its economy and financial sector.
22 February 2010
Is Greece heading for default?
Greece has slid into a serious fiscal crisis over the last few months. A ballooning budget deficit and high levels of government debt have raised questions in the minds of investors about the sustainability of the country’s public finances. The spread between Greek bond yields and those in Germany has risen to the highest level in more than a decade. As well as fiscal problems, Greece also suffers from weak external competitiveness, and now faces a series of policy choices all of which look unpalatable. Attempting to 'tough it out' with a sharp fiscal adjustment and deflation of wages could deepen the recession still further and founder in the face of social tensions. The 'nuclear option' of default and devaluation could tackle external adjustment but would cause immense financial disruption and negative contagion effects on the Eurozone and the rest of the world. Against this background, pressure for a bailout has been rising but so far the other EU countries have stopped short of announcing explicit financial support for Greece. The key risk period could April-May, when a large volume of Greek debt matures.
17 February 2010
Country Economic Forecasts
We are publishing on-line forecasts every day covering economic and political developments and prospects in over 191 countries, linked to our forecast databank. View example forecasts: