Economic Updates

On a seasonally adjusted basis, thehousehold finance index in the UK remained unchanged at 37.70 in February, maintaining its below 50.00 reading that separates growth from contraction.

The Bundesbank indicated that the German economy is set to return to growth in the 1Q13, after contracting in 4Q12 and growth would gradually pick-up pace during the reminder of the year. In its monthly report, the bank noted that growth might not be boosted by exports as the prevailing external conditions indicate that demand is unlikely to rise significantly in the near term.

The European Central Bank (ECB) reported that, a seasonally adjusted basis, the current account surplus in the eurozone fell to EUR13.90bn in December, from an upwardly revised EUR15.90bn surplus recorded in the prior month.

The ECB President, Mario Draghi suggested that eurozone set up a joint fund to restructure and wind down troubled banks, claiming that the step is needed to stabilize the financial system. He told European lawmakers the fund should be financed by levies on financial institutions to ensure it will not have to tap taxpayers' money over the medium term.

Bundesbank board member, Andreas Dombret stated that the ECB should ensure a timely exit from extraordinary measures and that these extraordinary measures are not a substitute for the government's consolidation and structural reforms.

On a YoY basis, machine tool order in Japan declined 26.4% in January, compared to an earlier estimate of a decline of 26.1%.

The minutes of the Bank of Japan’s (BoJ) latest monetary policy meeting has indicated that some policy members discussed extending the maturity of Japanese government bonds that it buys under its asset-buying program to around five years, while one member suggested an immediate introduction of the new open-ended asset purchase method. Additionally, the minutes indicated that some policy makers felt that if the recent trend of the Japanese yen’s weakness continues, it is expected to have positive effects on prices through an improvement in economic activity and a rise in inflation expectations.

Taro Aso, the Finance Minister of Japan, has stated that the Japanese government has no intention to buy foreign currency denominated bonds as a part of its monetary easing plan. 

Standard & Poor's stated that it is affirming its credit ratings on Japan, citing the nation’s strong external position and a recovered financial system. The rating agency affirmed the long and short-term credit ratings at “AA-” and “A-1+”, respectively. The outlook on the long-term ratings remained “Negative”.

During the week long Lunar New Year” festival, retail sales in China increased 14.7% to CNY539.00bn, slower than the 16.2% rise recorded during the festival week in the previous year.

The minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting revealed that policy makers believe that lower interest rates have begun to spur certain parts of the economy. The minutes also indicated that the central bank sees scope to loosen its monetary policy further, if needed, as inflation outlook remains contained.

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