Week ahead

We have made changes to our publications in the new year. The “European Weekly” is being replaced by our new “Watch out next week”, intended to give you a heads up of what we will be looking at over the next few days. For analysis on recent economic data please check our “Portuguese Economic Weekly” in our shop.

This week, Portugal tapped the markets with a very successful 5-year sovereign debt operation worth €3.25bn, that attracted demand worth €11bn. Export growth continued to rise in November. The unemployment rate fell to 15.5% in November. Against the background of better economic and financial conditions, Moody’s will announce revisions to the Sovereign rating in the next few hours but no big changes are expected, though the report may be more positive than on previous occasions. In Europe, ECB’s President Draghi reiterated that monetary policy will remain very accommodative in the coming months and that it will not hesitate to use all instruments in its power if needed to avoid inflation from being too low.

In the coming week, activity data should confirm that a mild recovery is occurring in Europe, against the backdrop of very low inflation.

13 Jan: December CPI/HICP, Portugal (INE)
This week we should get the confirmation that CPI inflation fell into negative territory this month, consistent with weak activity levels. Having said this, the mild recovery should prevent a full-blown deflation (i.e.: generalised and prolonged decline int he price level) in Portugal in the coming months.

14 Jan: November industrial production, Europe (Eurostat)
The improvement in confidence indicators and the PMIs should mean that industrial production will rise in the coming months, consistent with a very moderate pick-up in activity in Europe. The country details will be particularly important to know whether the centre of Europe, particularly France, is being much affected by the crisis.

15 Jan: December HICP, Europe (Eurostat)
Inflation in EMU should be confirmed at 0.8%yoy in December. Low inflation should keep the ECB on its toes. Last week President Draghi reinforced very vividly that inflation expectations should remain below but close to 2%. Should inflation fall lower we could see more ECB action.

15 Jan: World Bank upgrades its growth forecasts
According to Ms Lagarde, the Bank is likely to raise its forecasts on the back of improved economic conditions, particularly in the US. This release is the intermediate one and will not include new projections for all countries.