Wednesday, October 24 2018 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Updated: 7 hours 56 min ago
The economy of Valencian Community grew 3.2% in 2017 and will grow 2.7% in 2018 and 2.3% in 2019. This will add around 110,000 new jobs in the period and unemployment shall drop to 12.6%. Although pre-crisis GDP per capita will be recovered, creating more and better jobs remains as a challenge.
The dynamics of remittances are explained firstly by the number of transactions recorded, which increased by 5.0%, and secondly by the 3.8% increase in the average amount of remittances. In real terms, remittances grew by 9.9%, mainly due to the exchange rate effect.
Tensions between the US and North Korea remained contained as both parties. However, US-China relations worsened as both countries imposed new tariffs. The US and Canada achieved a new trade deal including Mexico to replace NAFTA. Turkey and Russia agreed to resolve the Idlib dispute in Syria with demilitarized zones. US-Iran relations are still on a worsening track.
The economy of Castile-La Mancha grew 2.5% in 2017, but will accelerate to a 2.8% in 2018 and 2.6% in 2019, creating around 48,000 new jobs and lowering the unemployment rate to 14.8% during this two-year period. While the pre-crisis GDP per capita will be reached, better and stronger job creation remains the main challenge.
Stable MXN, well-behaved core inflation and well-anchored mid and long-term inflation expectations mean no more preemptive hikes.
Last week’s European summit in Salzburg dealt a reality shock to the British government in its aspirations of obtaining the support of the European leaders for its Brexit negotiation plan. After Salzburg, the prospects of a reasonable agreement are at an all-time low, although it is to be hoped that the situation will improve in the next few months.
Portuguese GDP grew 0.6% t/t in 2Q18, mainly due to the increase in gross capital formation and the improvement in the external sector, and despite the low growth of domestic final consumption. Based on the indicators available so far, BBVA Research estimates that growth in 3Q18 will be approximately 0.3% QoQ SWDA.
Highlights: TCFD issues first status report. EBA launches 2018 EU-wide transparency exercise. ECB issues guide for on-site inspections and internal models investigations. ESMA issues RST on clearing obligations for intragroup transactions. PRA issues report on financial risks from climate change. US Agencies amend swap margin rule.
As we expected, the FOMC raised its benchmark rate for the third time this year. Markets reacted little to the widely anticipated 25bp increase, with 10-year treasury yields down a bit and equity prices up slightly.
Capital stock, labor, and productivity do not show a significant increase following the recent fiscal stimulus. According to our forecast, potential output will grow 1.8% per year on average for the next 10 years. Potential GDP growth reached its peak in 2017, and thus monetary policy normalization is adequate.
The China Vulnerability Sentiment Index remained stable through Q3 despite the escalated trade disputes with the US and growth slowdown. By component, the SOE index recovered. Both Housing Bubble index and Shadow banking index still held well. However, the Exchange Rate Index plummeted before recovered on the central bank’s revealed efforts to stabilize the exchange rate.
Highly predictive financial and economic factors suggest recession risk remains low. However, these indicators are trending towards pre-recession peaks, implying a recession could happen around 2020.
In July 2018, the nominal annual growth rate of traditional deposits (demand + term) of commercial banks was 10% (4.9% real). The growth rate in July was lower than in the previous month (11.8%) and was also lower than the growth rate in the same month of 2017 (10.5%).
On 27 August, Mexico and the US announced that they had reached an understanding allowing them to sign a trade agreement to replace the North American Free Trade Agreement (NAFTA). Although we are still awaiting the final text in order to offer our full assessment, on the basis of the announcement made by the negotiating teams, we can give a preliminary analysis.