Numbers of the Week
- ECB keeps policy rates and asset purchases unchanged. A recent rise in headline inflation (1.1% in December 2016) did not change the ECB’s projection that inflation will remain below target until 2019. At the last meeting in 2016 the ECB announced to extend its asset purchases to the end of 2017 at a reduced pace of €60bn per month from April onwards. (ECB, Eurostat)
- Euro area private investment declines to 21.9% in Q3 2016. The investment rate of non-financial corporations came down from 22.2% in Q2. Although investment was slightly above the post-crisis average of 21.7% (2009-latest) it lacked behind pre-crisis investment levels averaging 23.3% (2000-2008). (Eurostat)
- EU trade with the rest of the world shrank by 2.6% between January and November 2016 compared to the same period in 2015. A stronger decline of exports compared to imports reduced the trade surplus from 1.2% to 0.6%. In the euro area trade shrank by 1.2% but imports fell more than exports which pushed the trade surplus from 6.1% to 7.1%. (Eurostat)
- Pound rebounds after British PM lays out Brexit strategy. Since Monday the pound gained 1.8% against the euro and 2.4% against the US-dollar. Higher than expected inflation in the UK of 1.6% in December added to the pound’s rally over the course of the week. (Bloomberg, FT)
Chart of the Week
(Potential) EU membership candidates report solid growth, yet high unemployment
- The Western Balkans (Albania, Macedonia, Montenegro, Serbia, Bosnia and Herzegovina as well as Kosovo) continued their economic recovery driven by Serbia, the largest economy of the block. Yet, unemployment remains high and on average more than twice as high as in the EU28.
- Turkish GDP growth has been on a downward trend since 2011 and Turkey reported negative growth rates for the third quarter of 2016, the first time since the recession in 2009.
- Inflation and the exchange rate in the Western Balkans have been mostly stable, although some countries reported deflation in 2016. In Turkey inflation has increased further and is now above the target range of the central bank (3% to 7%).
- Of the seven countries, Albania, Macedonia, Montenegro, Serbia and Turkey are candidate countries. Negotiations with Turkey were opened in 2005 and with Montenegro in 2012. The accession criteria were defined by the European Council in 1993 in Copenhagen.
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