updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131hustle domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131wpforms-lite domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131With November’s finalized Eurozone Consumer Price Index (CPI) settled at 2.4%, the Core CPI (excluding energy, food, alcohol, and tobacco) stood at 3.6%.
In November 2023, prices across a diverse range of goods and services in the Eurozone area experienced a notable decline compared to October. According to new data published by Eurostat, the statistical office of the European Union, the Eurozone observed a downturn in its annual inflation rate, confirming a 2.4% figure for November.
The figure marks the lowest inflation rate since July 2021, underscoring a substantial shift in the economic landscape. Interestingly, this downward trajectory has endured for the seventh consecutive month, following October’s 2.9% year-on-year increase.
The energy sector was a major contributor to the November decline, which saw a notable 11.5% drop last month compared to a year ago, slightly accelerating from October’s 11.2% decline. Additionally, food prices exhibited a slower pace of increase at 6.9% year-on-year, down from the previous month’s 7.4%.
On a monthly basis, the Eurozone’s consumer price index fell more than initially anticipated, confirming a faster decline of 0.6%. Energy prices contributed to this monthly decline, falling by 2.2% in November, while food prices experienced a modest gain of 0.3%.
With November’s finalized Eurozone Consumer Price Index (CPI) settled at 2.4%, the Core CPI (excluding energy, food, alcohol, and tobacco) stood at 3.6%.
The highest contributions to the CPI came from services (+1.69 percentage points), followed by food, alcohol & tobacco (+1.37 points), non-energy industrial goods (+0.75 points), and energy (-1.41 points).
The data also showed a broader impact within the European Union, with yearly consumer inflation easing from 3.6% in October to 3.1% in November.
Among EU member states, Belgium reported the lowest annual inflation rates at -0.8%, followed by Denmark (0.3%) and Italy (0.6%).
Czechia, Hungary, Slovakia, and Romania recorded the highest annual rates. According to the Eurostat data, these countries saw their price levels at 8%, 7.7%, and 6.9% for the month ending November 30.
Comparing the EU and the Eurozone on a yearly basis, Eurostat data showed that the EU’s CPI finalized at 3.1% year-on-year in November, down from the prior month’s 3.6%.
The Eurozone Statistical Office also revealed fluctuations among Member States, with inflation falling in twenty-one countries, remaining stable in three nations, and rising in three in November compared to October.
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Despite the varied economic performance across the 20-country common currency bloc, the challenges stemming from high inflation persist.
The Eurozone is grappling with a significant economic downturn, as recent data indicate a sharp drop in inflation and a contraction in the region’s economy.
According to a preliminary report published Tuesday by Eurostat, the European Union statistics agency, inflation across the region plummeted to a two-year low of 2.9% in October, marking a considerable decline from the 4.3% recorded in the previous month. The dip also fell below the anticipated 3.1% consensus estimate from a Reuters poll of economists.
Eurostat revealed that core inflation, which excludes volatile food and energy prices, experienced a notable decline, falling to 4.2% year-on-year in October from the previous month’s 4.5%.
An in-depth analysis of the inflation components revealed that food, alcohol, and tobacco registered the highest annual rate in October at 7.5%, compared to 8.8% in September, followed closely by services at 4.6%, non-energy industrial goods at 3.5%, and energy at -11.1%, a significant drop from -4.6% in September.
“Looking at the main components of euro area inflation, food, alcohol & tobacco are expected to have the highest annual rate in October (7.5%, compared with 8.8% in September), followed by services (4.6%, compared with 4.7% in September), non-energy industrial goods (3.5%, compared with 4.1% in September) and energy (-11.1%, compared with -4.6% in September),” Eurostat said.
In a separate release, Eurostat also disclosed that the Eurozone economy faced a contraction of 0.1% in the third quarter, falling short of the consensus estimate that predicted GDP to remain unchanged from the previous quarter.
The European Central Bank (ECB) anticipates the economy to grow by 0.7% by the end of this year, 1% next year and 1.5% in 2025.
Germany, the country representing the largest economy in Europe, experienced a slight 0.1% quarterly decline, performing slightly better than the anticipated 0.3% downturn according to a Reuters poll of economists. However, on a price-adjusted basis, the German economy still exhibited a concerning 0.8% shrinkage compared to last year.
During the third quarter, Latvia took the lead in the Eurozone with the highest quarterly growth, recording a substantial 0.6% increase. Belgium and Spain followed closely with growth rates of 0.5% and 0.3%, respectively.
However, Ireland faced a significant setback, experiencing the highest quarterly decline of 1.8%, while Austria also grappled with a moderate decline of 0.6%.
The Eurozone region has been combating high inflation since last year after the pandemic.
Despite the varied economic performance across the 20-country common currency bloc, the challenges stemming from high inflation persist. This prolonged period of inflationary pressure, which peaked at 10.6% in October 2022, prompted the European Central Bank (ECB) to implement a series of interest rate hikes.
However, the bank decided last week to pause the rate hikes, reflecting the potential impact of the ongoing Israel-Hamas conflict, which poses significant upside risks to energy costs.
Although the recent deceleration in inflation may provide some relief, industry experts have cautioned against premature assumptions of an immediate economic recovery.
Despite the warning, ECB President Christine Lagarde believes the current economic climate within the Eurozone is expected to maintain a subdued state for the remainder of the year. Lagarde emphasized these points while speaking at a conference held in Athens last week.
“The economy will likely remain weak for the rest of this year. But as inflation falls, further household real incomes recover, and the demand for euro-area exports picks up, the economy should strengthen over the coming years,” she said.
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While inflation in Eurozone shows signs of slowing down, it still remains much higher than the targeted 2%. Economists also pointed out other cracks in the Eurozone economy.
For the month of July 2023, the Eurozone has delivered a robust set of GDP numbers beyond market expectations. The new growth numbers show economic activity picking up during the second quarter with inflation slowing down. However, economists still fear that a recession could be on the cards.
In July, headline inflation in the euro area was 5.3%, lower than the 5.5% in June. However, it is still much higher than the European Central Bank’s target of 2%. Core inflation, which excludes food and energy prices, stayed the same at 5.5% in July. This outcome might be a “disappointment for policymakers,” according to Andrew Kenningham, chief Europe economist at Capital Economics.
For the past year, Eurozone has been facing high inflation, leading the ECB to implement consecutive rate hikes in an attempt to control prices. Last week, the central bank raised rates by another quarter percentage point, bringing the main interest rate to 3.75%.
Initially, the inflation was mainly driven by high energy costs, but in recent months, food prices have become the primary contributor. In July, food, alcohol, and tobacco prices increased by 10.8%, although this hike was lower than in previous months.
The inflation numbers came amid previously sluggish economic growth, with GDP remaining stagnant in the first quarter of the year. However, a separate data release on Monday revealed that growth picked up in the second quarter, expanding by 0.3%, surpassing the 0.2% forecasted by Reuters’ analysts.
Nonetheless, Capital Economics’ Kenningham believes that the second-quarter GDP increase in France and Ireland was due to one-off factors, which may present a misleading impression of the economy’s actual strength. In a research note, Kenningham added:
″[It] does not change our view that the economy is heading for recession. Excluding [France and Ireland] GDP growth would have been only 0.04% q/q, or zero to one decimal place! As these factors are unlikely to be repeated in the coming quarters and the impact of monetary policy tightening is still intensifying, we think euro-zone GDP will contract in the second half of the year.”
In the second quarter, both France’s and Ireland’s economies showed resilience, with France’s GDP rate being 0.5% and Ireland’s expanding by 3.3%. However, ING‘s Senior Euro Zone Economist Bert Colijn pointed out that Ireland’s growth was exceptional and without it, the overall growth would have been much lower. According to survey data, the economy has remained relatively stagnant, and there are concerns that the coming quarters may face downside risks.
Spain also performed well, experiencing growth of 0.4%. In contrast, Germany had weaker growth during the same three-month period.
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On Thursday, the ECB increased interest rates for the seventh consecutive time, with the latest figure aligning with analysts’ predictions.
The European Central Bank (ECB) has hiked interest rates for a seventh consecutive time as its war against inflation wages on. Today, the eurozone central bank hiked rates by 25 basis points as expected following its May policy meeting. The latest rate hike decision also sees the main refinancing operations’ interest rate increased to 3.75%. In addition, the rate on the marginal lending facility and the deposit facility also grew to 4% and 3.25%, respectively. This is the seventh straight meeting ending in a hike.
Economists and market observers expected the ECB’s seventh interest rate hike to be smaller than its predecessors due to contracting financial conditions. Although inflation still appeared unrelenting, rising 7% in April, the spate of accompanying rate hikes in the West threatened a recession. Analysts also pointed to the extreme drop in credit demand due to stricter lending criteria, proving that the ECB’s latest rate hike would be far from the higher end of its basis points (bps) range.
For instance, Davide Oneglia, an investment research analyst at macroeconomic forecasting consultancy TS Lombard, had weighed in ahead of the ECB’s latest hike. According to Oneglia, “from a risk management perspective, shifting to 25 basis points would give the ECB the flexibility to deal with both upside and downside risks to growth and inflation. So, a 25 basis points hike is not necessarily ‘dovish.’ For now, we maintain our call for a 3.75% ECB terminal rate”.
Inflation in the eurozone grew 7% in April, with Germany and France experiencing the highest increases in consumer prices. However, despite these increases, core inflation, excluding food, fuel, tobacco, and alcohol, in the eurozone has slowed from 5.7% to 5.6%. The core inflation development is lower than consensus expectations and marks the first decline since June 2022 as central banks angle for a sustained decrease. However, despite the slowdown in core inflation, the present figure still far exceeds the ECB’s target of 2%.
Meanwhile, analysts anticipated that food, alcohol, and tobacco would have the highest annual rate in April of 13.6% compared with March’s 15.5%. Coming in a distant second is non-energy industrial goods, which turned out at a yearly rate of 6.2% last month compared to 6.6% in March. Lastly, services increased 5.2% compared to March’s 5.1%, while energy prices climbed again by 2.5% after dropping 0.9% in March.
Opinions remain divided on the ECB’s rate hike stance to curtail swelling inflation amid a banking crisis. For instance, Italy’s central bank chief Ignazio Visco previously warned that further rate increases would hamper the economy and create financial risks. Furthermore, Visco pointed out that more people would suffer greatly due to excess rate increases. However, his Dutch counterpart Klaas Knot believes that the ECB should continue hiking interest rates into the summer.
The US Federal Reserve also recently hiked rates by another 25 basis points, which took interest rates above 5%.
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The IMF has released its weakest global growth forecast in over 30 years as inflation, banking crises, and geopolitical problems bite hard.
The International Monetary Fund (IMF) recently published its most underwhelming medium-term global growth forecast in over 30 years. On Tuesday, the major United Nations (UN) financial agency expected global growth of 2.8% in 2023 and 3% in 2024. This forecast comes in slightly below what the IMF estimated in January as continued inflation and a banking crisis cause for concern.
In the forecast, the IMF predicted that global growth would be around 3% in five years. This gloomy prediction represents the lowest medium-term forecast in a World Economic Outlook since 1990.
The Fund pointed out:
“The world economy is not currently expected to return over the medium term to the rates of growth that prevailed before the pandemic.”
The Washington DC-based institution also said its baseline forecast assumes the successful containment of the “recent financial sector stresses.”
The IMF ascribed its weaker growth prospects to the progress of economies such as China and South Korea in raising their living standards. In addition, the international financial institution also referenced stagnated global labor force growth and geopolitical skirmishes. These include Britain’s exit from the eurozone (Brexit) and Russia’s military invasion and onslaught in Ukraine.
On the grim outlook for gross domestic product (GDP) growth between now and the end of next year, the IMF offered:
“The major forces that affected the world in 2022, including central banks’ tight monetary stances to allay inflation and China’s economic reopening—seem likely to continue into 2023.”
Also citing restrictive fiscal buffers amid record-high debt levels, commodity price surges, and the Eastern European strife, the IMF added that “the anemic outlook reflects the tight policy stances needed to bring down inflation, the fallout from the recent deterioration in financial conditions, the ongoing war in Ukraine, and growing geoeconomic fragmentation”.
The IMF stressed that all previously mentioned “forces” are “now overlaid by and interacting with new financial stability concerns”.
The world-renowned intergovernmental financial institution analyzed hotspot regions by breakdowns. According to the IMF, the US economy will grow at 1.6% in 2023, with the eurozone expanding by half this rate at 0.8%. However, the Fund also predicted that the UK economy would contract by 0.3% in 2023.
Meanwhile, in East Asia, the IMF forecast China’s economy to grow by a substantial 5.2% this year, continuing a post-Covid reemergence. In Southern Asia, the intergovernmental financial agency expects India’s GDP to swell by an even more impressive 5.9%.
Despite its ongoing war in neighboring Ukraine, Russia’s economy is expected to grow 0.7% this year. This IMF forecast follows the 2% contraction the Eastern European country endured in 2022 following its February 24th invasion.
The fiscal headwinds plaguing Western economies were underscored last month by the collapse of three US banks. These include Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital. The trio imploded after sustaining a customer bank run following fears of a recession. Since the bankruptcies, several leading banks, spearheaded by JPMorgan Chase, have stepped in to stem the contagion.
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As the fourth-quarter reporting season starts in earnest this week, chatter over the weekend focused on its impact on the fledgling recovery seen in the market. Discussions also centered around the odds of a recession materializing and the likely monetary policy stance of the Federal Reserve when it meets at the end of the month.
Here’s a recap of a few major headlines that hit the wire over the weekend:
1. Apple Avoids Layoffs: Apple Inc. AAPL was the lone high-profile tech company that has steered clear of job cuts amid the current tech downturn. The company’s lean manufacturing setup, thanks to its outsourcing to contract manufacturers, and austere amenities have helped it weather the tough environment without having to wield the ax, a report in The Wall Street Journal said.
See Also: Best Recession-Proof ETFs Right Now
2. Doge Runs Over Weekend: Some cryptocurrencies, including Bitcoin BTC/USD and Dogecoin DOGE/USD, picked up some upward momentum over the weekend. Crypto analyst Rekt Capital said Dogecoin was testing the top of a falling wedge, attempting to break out of it. If it is successful in its attempt, it could be in for a big upward move, the analyst said.
3. Activism At Salesforce? A Wall Street Journal report said activist investor Elliott Management has picked up a multi-billion-dollar stake in Salesforce Inc. CRM. The hedge fund reportedly said it looks forward to constructively working with the company to realize the value befitting a company of its stature.
4. Brazil, Argentina Working On Common Currency: South America’s two largest economies — Brazil and Argentina — have started preparations to launch a common currency, reports said. The two countries would reportedly discuss the plan at a summit in Buenos Aires this week. The two nations have also called out to other Latin American countries to join them. If the efforts fructify, the world’s second-largest currency block after the eurozone could be created.
5. Evergrande Chairman’s Fortunes Go Up In Smoke: Embattled Chinese real estate developer Evergrande’s chairman Hui Ka Yan has seen his net worth drop from $42 billion in 2017 to $3 billion currently, according to Bloomberg. Evergrande’s fortunes have taken a turn for the worse after the property market in China collapsed and the company was not able to keep up its commitment with regard to its debt obligations.
What Else:
As the fourth-quarter reporting season picks up momentum, a few high-profile tech companies and blue-chips are scheduled to report their earnings this week.
Vanda Research’s data show that retail investors continued to pile on Tesla Inc. TSLA stock despite its steep decline in 2022.
JPMorgan Strategists’ latest analysis showed that the U.S. stock market is baking in a lower recession odd than it did in October.
Read Next: Fed Tightening Cycle Near Peak? This Treasury Futures Trend Seems To Say It Could Happen
The cost of living crisis was a major challenge for the region this year as it attempted to bring down energy costs.
As the year is wrapping up, the efforts of the European Central Bank (ECB) to curtail the growing surge in inflation within the Eurozone seem to be yielding good fruits. Preliminary readings from Eurostat, the statistical office of the European Union, show that inflation is pegged at 10%, a figure that is lower than the 10.6% reported in October this year.
Despite the slowing pace, key aspects of the readings show that the inflation level is still significantly higher across a wide range of consumer products. Energy is projected to have the highest inflation reading of 34.9% on an annualized basis. This, however, compares with the 41.5% recorded in October.
Besides energy, food, alcohol, and tobacco saw an inflationary upshot of 13.6%, compared with 13.1% in October while non-energy industrial goods recorded a 6.1% growth without many changes compared with October. The Services sector also recorded a tiny decline and came in at 4.2%, compared with 4.3% in October.
The current drop in inflation has started fueling a number of speculations with respect to what the next steps will be for the ECB with respect to interest rate hikes.
“The fall in headline HICP inflation from 10.6% in October to 10.0% in November was the first decline since June 2021 and was a bigger fall than originally expected,” Andrew Kenningham, chief Europe economist at Capital Economics said in a note, adding “We would not be surprised to see the headline inflation rate rise again in December or January given the volatility in the monthly numbers, but there is little doubt that it will fall rapidly next year.”
The cost of living crisis was a major challenge for the region this year as it attempted to bring down energy costs, fueled by the ongoing war between Russia and Ukraine earlier in the year. Thus far this year, the European Central Bank has hiked interest rates three times, with the largest increment coming in at 75 basis points.
European officials, including Edward Scicluna, the governor of the Bank of Malta had predicted earlier that the rate of inflationary growth is already getting to its peak. The reading is similar to related inflationary rates recorded in the United States earlier this month.
Despite the impressive figures, Economists are somewhat divided on whether it is the right time for the ECB to taper its rate hikes or not. While some believe the economy should be allowed to respond positively to the previous rate hikes, others are of the opinion that inflation is still sky-high and necessitates interest rates to push.
While the speculation mounts, ECB President, Christine Lagarde has reiterated the bank’s readiness to keep applying the appropriate measures until inflation is down to the projected 2% level.
“We expect to raise rates further to the levels needed to ensure that inflation returns to our 2% medium-term target in a timely manner,” she told European lawmakers.
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