Week Ahead 24-28 March


This week, the EU finally approved the Single Resolution Mechanism for large European banks facing difficulties, which should promote confidence in the European Financial sector. The deal gives the ECB and the Resolution Board triggering power to launch the process in case a bank is deemed to be nearing bankruptcy. The action plans for the bank will be drawn by the EU Commission, that may or not request the Council (of ministers) for support. The deal therefore places more distance between the bank and its national authorities. The decision-making process was streamlined to allow for a resolution scheme to be approved within a weekend, from the closing of the US markets to their opening in Asia. The fund will be built up over the next eight years to reach €55bn.

In the Portuguese-speaking world, in Portugal, the Government’s credit agency (IGCP) bought back and issued new debt at lower rates and Portugal initiated bilateral talks with its European partners about the outlook after the current Economic and Financial Assistance Programme ends.

The IMF has released its second post-programme monitoring report for Angola. Growth is projected to have slowed to 4.1% in 2013 after 5.2% in 2012, but is expected to increase to 5% in 2014 as oil production recovers. The non-oil sector continues to grow, due to the Government’s efforts to diversify growth to the manufacturing the construction sectors through investments in roads and electricity. According to the IMF, the 2013 budget took important steps toward the integration of quasi-fiscal operations, but some slippage has been introduced in the 2014 budget.

Elsewhere in the world, Federal Reserve President Janet Yellen surprised the markets by hinting that the first rate hike may come in earlier than expected in the second half of 2015. The Fed is currently purchasing €55bn worth of assets this month and is expected to end this programme by the end of the year.


24 March: March Euro area PMIs  are expected to continue to rise well above 50, pointing to a continued recovery. Only France should record PMIs below 50. The PMIs (Purchasing Managers Indicators) are diffusion indicators  – a value above 50 signals growth and below 50 a contraction.

28 March: March European Sentiment Indicator – markets expect a small rise or stabilisation. The indicator for the euro are is currently in line with its long term average while the one for Portugal is only 3 points short of it.