News

Latest UniCredit Chartbook

Welcome to the latest UniCredit Chartbook. We hope you will find this publication useful.

Monthly recap

■ EMU: In February, survey indicators maintained their recovery trend, although the pace of improvement remained slow, and the evidence was somewhat mixed. In the manufacturing sector, the forward-looking components look increasingly promising, suggesting that the process of gradual stabilization in industrial activity will continue. We do not expect the handling of the Cyprus bailout to pose any material systemic risk. The ECB remains reluctant to further relax conventional policy, despite inflation falling below 2% and a very weak CPI projection for 2014 (at only 1.3%). However, the central bank committed itself to keeping its stance accommodative for "as long as needed", clearly suggesting that an exit is still some time away.

■ US: The US economy is regaining momentum. While growth in the current quarter is still being held back by tighter fiscal policy, notably the expiration of the payroll tax cut, we expect GDP growth of 1.5% (annualized) – and the risks to this forecast are clearly skewed to the upside. The two factors behind this are the impending reacceleration in inventory investments, and resilient consumer spending, supported by a better labor market and a renewed pick-up in borrowing. Despite the improved economic situation, the Federal Reserve will continue its bond-purchasing program. The two most influential FOMC members, Chairman Bernanke and Vice Chair Yellen, unequivocally made clear that they have no intention to scale back the current degree of monetary accommodation.

■ CEE: The CEE region is showing signs of a recovery in growth, supported by stronger external demand and a bottoming out in the credit cycle.  Following a particularly weak 4Q, led in part by vehicle manufacturing, January data is already showing improvement. Meanwhile inflation pressures are easing in many cases, allowing central banks to ease rates and/or leave them on hold for longer.  The primary risk remains a normalisation of G7 monetary policy. 

■ China: Recent data releases in China have been mixed, painting a picture of an ongoing but rather moderate and uneven economic recovery. Rising inflation and growing concerns about a (renewed) housing bubble and financial risks are posing additional challenges to China's economic policy. The new government will most likely react with a combination of further selective fiscal stimuli and prudent monetary policy, but no rate hike this year. Overall, we stick to our expectation of 1H13 GDP growth accelerating modestly to the 8¼-8½% region, but levelling off thereafter.

Document link