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FXstreet.com: Fundamental
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FXstreet.com: Fundamental. Get the grip on the macro-economic picture with the most respected firms.
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Can FDI be sustained in CEE?
Integration into the EU has supported large capital flows into new EU member states. Foreign direct investments (FDI) have hence increased rapidly, and have to a large extent financed large C/A deficits. In the coming years we, however, see large risks that these flows could decline in most countries in CEE, SEE and in the Ukraine and Kazakhstan. Below we present some arguments for this view. First, historical FDI in the EU8+2 has to a large extent reflected privatisation revenues, and since
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The credibility game intensifies
Tougher times for policymakers • In the June edition of Emerging Markets Briefer we made the argument that in todays world of slowing global growth, rising inflation and an ongoing credit crisis, it is extremely important that economic policies be credible. We still believe this theme is extremely important, and market developments in the past month clearly underline this fact. • With the global economic and financial environment worsening, policymakers will be tested to a much greater degree
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A tough situation
Global equities markets are in a tough situation. Declining indices and session finishing in red are not the best advertisement for stocks recently. The mood of investors is not good and it seems that this situation can last for some time. This past week was no different. Declines were not spectacular but steady. The American economy is far from recovering, and investors are starting to get worried. The Dow Jones Industrial Average declined by 1.25% to 11,287 while the S&P 500 dropped by
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Less fear of more hikes
Macro outlook • Inflation fears and financial fears are still battling for the leaders jersey in the financial markets. Financial fears have been in the lead in recent weeks: equities have tumbled and credit spreads have widened as risk appetite has waned. This has boosted demand for government bonds. Short yields have fallen in both the US and in Euroland since the start of June. However, inflation fears could easily regain the lead if oil prices continue to rise. Hence, uncertainty is high.
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Fed to start normalizing its monetary
Impulses. Once again, the US economy is proving to be more “resilient“ than anticipated. At just over 1½%, we expect that GDP growth in Q2 2008 was even stronger than at the beginning of this year (+1%). The main catalyst was, however, the federal tax rebate checks (p. 5-7). Fed. This boost to purchasing power should also be felt in the current quarter. At the same time, inflationary pressures are still increasing. But the Fed cannot yet scale back its massive monetary policy stimulus as
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