Tuesday, May 22 2018 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Updated: 4 hours 34 min ago
The European Commission recently issued a guide for countries wishing to be able to create bad banks for the purpose of managing their banks’ impaired assets, whether loans or repossessed assets. A bad bank is a public or private sector entity that acquires these assets and has an extended period in which to liquidate them by means of recoveries or sales.
Real estate fluctuations have important implications for growth and business cycles in China. We investigate how vulnerable are four economic sectors including government, banking, enterprises and households to the prospective price slowdown in the housing market by analyzing the exposure of these sectors on the housing market and conduct a stress test on these sectors.
This watch examines the potential effects of the ongoing US-China trade clash on the Chinese economy. At its current stage, given a trade skirmish rather than a full-blown trade war, the downside risk to the Chinese economy seems contained. However, the Middle Kingdom stands to take a deeper hit in the event of a protracted trade war, the likelihood of which is still low.
The drop in inflation was broad-based and broadly in line with expectations. Disinflation pressures seem to be taking hold. Inflation set to fall turther; Banxico will likely keep rates on hold next month (12 Apr).
Our BBVA-GAIN model projects the world GDP to grow 1% QoQ in 1Q18, up from 0.9% in 4Q17. Global exports strengthened significantly in February, but industrial output and retail sales were modest in early 2018. Confidence remains at high level in 1Q18 so far, but showing some signs of moderation.
Our MICA-BBVA model suggests a cruise speed growth in 1Q18 at 0.6/0.7% QoQ, supported by strong global trade and fixed investment. Despite solid fundamentals, we observed early signs of moderation as weak hard data in January adds to a cooled optimism in 1Q. Annual inflation eased again to 1.1% in February driven by food, while the core figure remained steady at 1.2%.
Highlights: FSB published key priorities for Argentine G20 presidency. BCBS consulted on market risk capital requirements. ECB published SSM supervisory manual. EBA published assessment of the credit risk mitigation framework. ESMA consulted on requirements for securitisation repositories. European Council published guidelines on the framework for the future EU-UK.
Pensions are again at the heart of an intense debate. Adjustment for inflation and the repeal of the 2011 and 2013 reforms are among the demands that are putting the sustainability of the system, and consequently the sufficiency of future pensions, at risk.
Banco de México publishes a new survey on bank credit conditions. Banco de México highlights the decrease in the use of financial resources by the public sector and a shift in intermediation towards the private sector. Housing prices rise 7.35% per annum in the fourth quarter of 2017. The markets steadied after the temporary upturn in volatility.
In 2017, credit to the non-financial private sector (consumer, companies and housing) and traditional bank deposits (sight + term) both slowed down. In the case of credit, in 2017 the portfolio only grew by half the growth rate observed in the previous year.
The housing sector has been one of the main drivers of economic activity. It will continue to be very important in the future. There is still ample margin for growth due to a housing deficit in the country, rising household incomes, and a recent improvement in financing conditions.
The economy of Galicia could have grown 2.8% in 2017 and will grow at least 2.6% in 2018 and 2.3% in 2019. This will add around 27,000 new jobs in the period and unemployment shall drop to 12.1%. Although pre-crisis GDP will be recovered, creating more and better jobs remains as a challenge.
FOMC: Powell, an Advocate for Optimism. As we expected, the FOMC increased the Fed funds rate to 1.5%-1.75%, confirming that newly appointed Chairman is committed to maintaining continuity with his predecessor.
Financial market volatility and concerns on raising U.S. production have weighted on prices through 1Q18. However, fundamentals have not changed significantly; thus, we maintain our baseline scenario. Demand will remain supportive of higher prices, but its impact will be compensated by growing non-OPEC supply.
Globalisation is very closely related with economic development. The periods of greatest dynamism in trade and GDP were the decades leading up to the WW I, those following WW II and the period between the mid-1980s and the onset of the crisis in 2009. This latter period was characterised by the prominent role played by emerging markets and technological improvements.