For more than two decades, Japan has been caught up in a slow-burning crisis. Rapid aging population and low productivity have added to the declining financial health of the country. Japan’s public debt is twice the size of its annual GDP.
Central bank head Stephen Poloz said that the second quarter would see positive results after the economy suffered from the shock of low oil prices. The bank expects an annual growth rate of 1.8 percent in the second quarter and 2.8 percent for the third quarter.
The euro pullback spurred by the Federal Reserve statement that continued to regard the slowdown as having to been partly caused by transitory factors, was seized upon in Europe as a new buying opportunity. Support is seen near previous resistance in the $1.1050 area. The euro extended its recovery, rising to almost $1.1250. The retracement objective of the slide since mid-December comes in near $1.1265, which is also the boom of the shelf created in February. Above there, the $1.1515 area is the 50% retracement, while the double bottom projects toward $1.1600-50.
Press reports suggest that the People’s Bank of China (PBOC) is considering unconventional monetary policies, including direct purchases of local government bonds and/or some sort of long-term refinancing operation (LTRO) using local government bonds as collateral. While there is no universal definition of QE, we make the distinction that the former (direct bond purchases) are unconventional measures, while the latter (long-term liquidity injections) are along conventional lines.
The Abe administration’s policy of separating the organisational interests of JA-Zenchu, the peak body of agricultural cooperatives (JA), from the interests of the prefectural central unions (chÅ«Åkai) and local cooperatives and farmers generally paid off in April’s local government elections.
Prime Minister David Cameron vowed to hold a referendum by 2017, determining whether Britain should leave the European Union. However, the promise is based on the ability of conservatives to win elections on May 7.
Norway is often held aloft as an example that the UK could follow in discussions about a potential British exit from the EU (the so-called Brexit). The Norwegian experience with the EU is unique. It shows it is possible for a country to be economically associated to and, at the same time, politically separate from the EU.
Indian Prime Minister Narendra Modi’s recent visit to Seychelles, Mauritius and Sri Lanka reflects New Delhi’s changed foreign policy priorities. It signals that India is no longer willing to be outmanoeuvred in the Indian Ocean region — its strategic backyard.
Modi’s visit was also part of the prime minister’s efforts to reach out to India’s neighbours. This started with his inauguration when he invited the heads of state of all the member nations of the South Asian Association for Regional Cooperation.
UK growth slowed to its lowest rate since 2012 in a surprise reversal.
The British economy saw growth slow to just 0.3% in the first quarter of this year, a sharp reversal from the previous quarter when growth rose at a 0.5% rate. Analyst had varied expectations of growth nearly double the actual rate for Q1.
Consumers Fail to Show Up
It is a mixed start of the week for EM, though the short-term outlook is constructive. The rebound in commodity prices has changed relative risk perception across the producer-importer spectrum. Iron ore, for example, is up some 25% since the start of the month while oil is up nearly 18% over the same time-period. This has added confidence to the recovery of currencies such as BRL and RUB, to the point where measures to counter further appreciation are now being discussed or (in the case of Russia and Taiwan) implemented.
