Economic Updates

According to the Hometrack housing survey, on a monthly basis, house prices in the UK have advanced 0.3% in March, the biggest monthly gain in three years and compared to a 0.1% rise recorded in the previous month.

Fitch Ratings has placed the UK’s “AAA” credit rating on review for a possible downgrade, citing high government debt levels and weak growth.

The Conference Board reported that, the leading economic index in Germany gained 0.3% in January, and compared to 0.5% rise reported in December. Meanwhile, the coincident economic index gained 0.4% in January, after being on a down trend since July 2012.

The Ifo business climate index in Germany fell to a reading of 106.70 in March, marking its first fall in five months and from a reading of 107.40 recorded in February. Similarly, the current conditions index dropped to a reading of 109.90 in March, from a reading of 110.20 recorded in the previous month. Meanwhile, the business expectations index declined to a reading of 103.60 in March, from a reading of 104.60 reported in February.

A report from statistical office Insee showed that, the French economy will likely stagnate in 1Q13. The economy is forecasted to record no growth in 1Q13, following a 0.3% contraction in 4Q12. In the previous estimate, the economy was estimated to grow 0.1% in 1Q13. Further, GDP is expected to record a modest growth of 0.1% in 2Q13, which is in line with the initial projection. At the same time, the country’s unemployment rate is seen rising to 11.0% percent in mid-2013 from 10.6% reported in 4Q12.

The business confidence index for the manufacturing sector in France remained unchanged at a reading of 90.00 in March. At the same time, the service sector confidence index declined to a reading of 84.00 in March, from a reading of 88.00 reported in the previous month.

Cyprus has reached a bailout agreement with the European Central Bank, the European Commission and the International Monetary Fund. The agreement calls for splitting of the Popular Bank of Cyprus or “Laiki Bank” into a “good bank” that would be folded into the larger Bank of Cyprus, and a “bad bank” that would eventually be closed down. The deposits under EUR100,000.00 at Laiki would be shifted to the Bank of Cyprus, while deposits over EUR100,000.00 at Laiki would be frozen and used to pay off debts.

Klaus Regling, the Head of the European Stability Mechanism, has stated that Cyprus would receive the first tranche of a EUR10.00bn international bailout in early May 2013 after all formalities are completed in April 2013.

The Federal Reserve Governor, Sarah Bloom Raskin, in a speech in Washington, stated that though the central bank has fueled job growth by keeping the main interest rate near zero since December 2008, the Fed has “little effect on the types of jobs that are created” over the longer term. Further she added that too much of the recent growth in US employment has been concentrated in low-wage and temporary jobs, leaving the recovery on shaky ground.

The Economic Cycle Research Institute reported that, the leading index in the US rose 6.4% in the week ended 15 March 2013, following a 6.3% rise recorded in the previous week.

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