Japan Downgrade

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"S&P's diagnosis about the uncertain economic outlook means that prospects for fiscal consolidation are becoming uncertain," said Toru Suehiro, senior market economist at Mizuho Securities.

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U.S. Sanctions Set To Exacerbate Economic Issues In Crisis-stricken Venezuela

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Growth projected to regain some steam in Q4; crisis-stricken Venezuela groans under oil sanctions Latin America’s bumpy economic recovery is expected to have had a better quarter at the end of 2018, after growth slumped in the third quarter. FocusEconomics estimates that GDP increased 1.7% year-on-year in Q4, above Q3’s 1.5%. Despite the modest uptick, growth remains weak in the Latin American economy, which had a disappointing 2018 overall. Weaker global trade, a noisy election cycle, shifting sentiment for emerging-market assets and one-off shocks in major players caused the recovery to flounder last year. Preliminary data for Mexico revealed that growth lost steam in the fourth quarter. Plunging industrial activity on the back of contractions in the construction and mining sectors dented economic activity, while retail trade figures were more positive. Official GDP figures for the rest of the region’s economies are still outstanding, although FocusEconomics analysts estimate that …
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Euro Area Forecast & Analysis, June 2019

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Summer is in full swing and so is the geopolitical storm - Chad


Euro Area: ECB pushes back possible rate hike at June meeting The European Central Bank (ECB) turned more dovish at its June monetary policy, responding to the bloc’s softer growth momentum. The ECB pushed back the timing of a rate hike and left interest rates at record-low levels.


Germany: Industrial sector not out of the woods yet Industrial production fell 1.9% month-in-month in April in seasonally- and calendar-adjusted terms, swinging from March’s 0.5% increase. Production in the energy sector was down noticeably; the construction sector, however, provided a small silver lining as production increased marginally.


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Will Italy Default? Italian Budget Concerning Investors

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At the time of writing, the Italian government budget deficit target is 2.4% in 2019, 2.1% in 2020 and 1.8% in 2021. This misses the ECB target of 1.6% each consecutive year. Politicians are hoping to stimulate the country’s lacklustre economy and fulfil pre-election pledges including: the introduction of a guaranteed basic income; the adoption of a flat rate of income tax and the repeal of the previous government’s pension reforms. For the Five Star Movement, the agreement to enlarge the budget deficit and implement their flagship policies is an important step forward, as polls suggest that the party has been losing ground to its coalition partner. However, Italy’s fiscal space is already limited and, despite running a primary surplus, the government’s debt repayments equate to roughly 4% of GDP. According to Fathom calculations, the coalition’s current spending plans would see government debt hit 134% of GDP in 2020. Markets have taken a dim view of the proposed fiscal expansion an…
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