Category: Economics

Macrosnap of Sweden’s central bank’s krona strategy and how they are protecting their currency from getting too strong?

  • Central Bank worried about currency getting too strong (as euro weakens and investors seek higher returns).
  • So have made (by announcement) policy interest rates more negative (i.e. depositors need to PAY to have their money in banks) hence making krona less attractive for foreign investors.
  • Central bank also expanding its bond buying program (QE), i.e. aggressively buying krona-denominated bonds from the market (this results in a flood of krona into the market, hence if anyone wants to own krona, there are plenty available - this is an effective form of currency intervention, but without the Central Bank actually having to be active in the FX market).
3049

Eurozone growth outlook?

3044

Impact so far of slower China growth?

3026

Macrosnap of Ireland’s economy?

  • Currently fastest growing eurozone economy.
  • Happening due to booming exports and strong inbound foreign direct investment (different from 2005 boom, which was characterised by domestically-driven demand and consumption).
  • Ireland's bailout has ended, and hence so has austerity - public spending set to rise, which is also good for growth.
3023

China slowdown hits Australia harder than NZ?

  • Both commodity exporters and as China slows, it imports less.
  • But NZ relies on exports of soft commodities, like dairy, whilst Australia relies on exports of hard commodities, like iron ore.
  • China's slowdown in part due to property boom ending, so demand for iron ore has collapsed, while demand for dairy holding firm.
2962

What structural economic problems is the UK facing?

  • Over-reliance on housing market to drive demand (i.e. dependent on wealth-effect of rising house prices).
  • Too little reliance on investment and exports to drive demand.
  • Poor productivity growth.
2960

Macrosnap of Spain’s recovery?

  • Growth forecasts being revised upwards (expected to double Germany's growth rate this year) - property market up.
  • External drivers: Low euro (helps exports) and weak oil (Spain is an energy importer).
  • Internal drivers: Successful labour market reforms have made Spanish companies more competitive.
2951

Mass protests against Brazil’s PM Rousseff?

2945

Macrosnap of China’s housing market?

  • Only came into existence in late 1990s after privatisation of housing that was previously assigned to the population by government or state controlled entities.
  • Resulted in frenetic building of new homes over the course of the last decade.
  • Led to large oversupply and current property downturn.
2934

Macrosnap of New Zealand/Australia currency divergence?

  • NZ$ nearing parity with AU$.
  • NZ$ strong off solid economy, big immigration ,stable + solid politics.
  • AU$ weaker off weak economy (Australia highly exposed to slowdown in China demand for commodities) & political wobblies.
2926
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