WEEK IN REVIEW:
In the Portuguese-speaking world, industrial production eased in Portugal to 3.9%yoy in January, after gaining ground for several months. In Angola, non-performing loans were reported to have risen by 50% in 2013 to AOA327bn.
In the euro area, the ECB has left its main interest rates unchanged this week and suggested that it would not implement further quantitative measures. President Draghi appeared confident that the recovery in Europe is taking hold and that deflation is not in the cards for now, though inflation is likely to remain weak for a prolonged period. The central bank said that it expects gross domestic product growth of 1.2% this year, compared with 1.1% in December, 1.5% in 2015 and 1.8% in 2016. Inflation is seen increasing only slightly this year to 1%, to 1.3% in 2015 and 1.5% in 2016. Moreover, President Draghi is confident that financing conditions in the more fragile periphery countries such as Portugal is improving, as interest rates on loans have started falling.
Elsewhere in the world, US non-farm payrolls were up 175 thousand, better than expected, supporting the idea that the batch of weak data a few weeks before was mostly due to extreme whether conditions around the turn of the year.
During the week:
- The EU and US hold the fourth round of talks under TTIP (Transatlantic Trade and Investment Partnership). The EU Commission estimates that, when it comes into force, the TTIP could add 0.5% to EU’s GDP growth.
- Ecofin meeting: the meeting will be preceded as usual by a eurogroup meeting the day before, where Portugal’s options for leaving the current programme may be discussed.
- European January Industrial production: markets expect a small 0.5%mom recovery after -0.7%mom in December. The recent PMIs suggest that IP should continue to rise in the coming months.