Policy tightening to impact emerging markets

The problems in Turkey and Argentina have already been overshadowed in the news headlines by a renewed focus on the escalating trade war between the US and China, with an additional round of US tariffs on Chinese goods likely to be implemented later this month. The Chinese economy is showing signs of slowing with Chinese…

Nafta-negotiations enter homestretch

“So it’s an incredible deal. It’s an incredible deal for both parties. Most importantly, it’s an incredible deal for the workers and for the citizens of both countries. Our farmers are going to be so happy. You know, my farmers — the farmers have stuck with me; I said we were going to do this.…

Federal Reserve’s backseat driver

Politicians acting as backseat drivers to monetary policy is nothing new. The independence of the European Central Bank was enshrined in EU-treaties to prevent political interference. The last senior politician to actively attempt to influence policy-making was the German SPD-finance minister Lafontaine in 1998/99. That did not go well. Italian politicians are now making demands…

Spotlight returns to Rome

After a decade of turmoil and bailouts, Greece finally left the 2015-bailout program on 20 August. Greece remains wobbly and fragile with added uncertainty from the Turkish crisis, but the exit is still a milestone.   The milestone would have been more of a festive occasion if it was not for the Italian government and…

Testing times for emerging markets

On 17 August, credit rating agencies S&P Global Ratings and Moody’s lowered Turkey’s credit rating further into junk (non-investment grade) territory. S&P cited the dire economic outlook as the lira depreciation is set to force through a sharp balance of payment adjustment. The rating was lowered from BB- to B+ with a stable outlook. Moody’s…

Tariffs are adding to US inflation

On 1 August, US Trade Representative Lighthizer confirmed that the US is considering to raise the tariffs on USD200 billion-worth of imports from China by 25% instead of the initially proposed 10%. The public hearing process has been extended to 5 September, allowing the final list of targeted products to be published by mid-September and…

Mr. Juncker goes to Washington

It is an ironic twist of fate that one of the most ridiculed politicians in the EU, EU-Commission President Jean-Claude Juncker, was hailed as Europe’s strongest card, when he embarked on a mission to Washington to defuse the escalating trade conflict between the US and the EU. President Trump had labelled the EU a “foe”…

Global unsynchronization

At the beginning of 2018, optimism was ubiquitous. A self-sustaining growth cycle finally seemed to be underway thanks to the extremely easy monetary policy in developed countries and moderate commodity prices. The euro area had moved out from the shadows of the euro crisis, and further fiscal stimulus in the US was adding fuel to…

Brexit Options Are Crystalizing

The British prime minister Theresa May has demonstrated remarkable survival skills since her election in August 2016. Navigating between the waring fractions within the Conservative party – hardline Brexiteers and business-aligned Remainers – May has allowed considerable public discourse on every conceivable topic. This year, the lines have been drawn sharper, as the approaching deadline…

Trade tensions escalate

The first phase of the bilateral trade conflict with China is now on. Tariffs and counter-tariffs on USD34 billion worth of goods have been implemented with additional USD16 billion following in a couple of weeks. The US is aiming at China’s industrial strategy “Made in China 2025”, while China has hit back at US agriculture…