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Global Economy Lives on the Edge as Crisis Veterans Sound Alarms

Officials gathering for Group of 20 meetings in Buenos Aires this weekend will have plenty more crisis fodder than Lionel Messi’s World Cup performance to gab about. We heard growing fears this week that a downturn might be brewing from various corners of the global economy, while central bankers find their place in the policy tightening cycle and trade battles rage on. Here’s our weekly wrap of what’s going on in the world economy. Global Growth Gossip Three titans of past financial crises voiced some worry about the U.S. ability ...

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Effects of Greek bailout will extend beyond August – Merkel

German Chancellor Angela Merkel said on Friday the effects of Greece’s bailout package would not end on the day that the programme itself ends. Eurogroup chairman Mario Centeno said last week that euro zone countries were set to disburse a final 15 billion euro (13.40 billion pounds) bailout loan to Greece in August. “It will be an important day in August when this programme ends but the ongoing effects of this programme won’t end on that day,” Merkel told a news conference. Source: Reuters (Reporting by Michelle Martin and Riham ...

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Nobody Knows Where to Take Shelter From Trump’s Trade War

During months of heated rhetoric surrounding trade and tariffs, Wall Street strategists and advisers largely assumed it was all just brinkmanship. But suddenly more of them are advising investors to go defensive. Easier said than done in 2018, when every global market is intertwined. S&P 500 companies got 43 percent of their sales from overseas in 2016, according to a report from S&P Global Inc. “There is a lot of debate on what is a defensive sector,” says Emily Roland, head of capital markets research at John Hancock Investments. Some ...

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German Finance Minister sees little progress on trade at weekend G20 meeting

German Finance Minister Olaf Scholz said he does not expect finance ministers from the Group of 20 leading economies to make much progress on resolving global trade disputes at a meeting this weekend in Buenos Aires. “Unfortunately, it does not look like we will take big steps forward in Buenos Aires,” Scholz told the Stuttgarter Zeitung newspaper. Source: Reuters (Writing by Paul Carrel, editing by Thomas Escritt)

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Eurozone Current Account Surplus Declines In May

The euro area current account surplus declined notably in May, the European Central Bank reported Friday. The current account surplus fell to a seasonally adjusted EUR 22.44 billion from EUR 29.55 billion in April. This was the lowest since March 2015, when it totaled EUR 19.46 billion. The surplus on trade in goods and services decreased to EUR 21 billion and EUR 8 billion, respectively. Primary income plunged to EUR 3 billion from EUR 9 billion. Meanwhile, the negative balance on secondary income narrowed to EUR 10 billion from EUR ...

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Eurozone Govt. Deficit Narrows In Q1

The euro area government deficit continued to narrow in the first quarter as revenue increased amid a fall in expenditure, figures published by Eurostat showed Friday. The general government deficit to GDP fell to 0.1 percent from 0.6 percent in the fourth quarter. Data showed that government revenue rose to 46.3 percent of GDP from 46.1 percent. On the other hand, government expenditure dropped to 46.4 percent from 46.8 percent in the previous quarter. Among euro area economies, the highest budget surplus of 2.5 percent was registered by Malta and ...

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May’s Brexit Leaves No One Happy

The prospect of anyone considering Brexit a success is looking increasingly slim. The U.K. and the European Union go into the summer break far from any kind of agreement, with a March deadline fast approaching. British Prime Minister Theresa May finally published her blueprint for the two sides’ future economic relationship last week and lost two senior colleagues and a vote in Parliament. She also was forced to make a series of humiliating concessions. Even so, Boris Johnson, who quit as foreign secretary, said yesterday her plan would leave the ...

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Italy’s Barbieri Hopeful of `Upside Surprise’ in 2Q GDP Data

Italy’s economy may have avoided a slowdown in the second quarter thanks to a strong performance from the labor market and industry, according to the finance ministry’s top economist. Given the pickup in employment and “very positive figures on industrial turnover,” Riccardo Barbieri said he is “hopeful of an upside surprise” and expansion could match the 0.3 percent pace of the first quarter. The Bank of Italy said last week growth may have weakened to about 0.2 percent in the April-June period. “There is no reason to expect a marked ...

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Three Strikes Should Rule Out U.K. Rate Increase

The interest-rate futures market is convinced the Bank of England will raise borrowing costs next month. But three consecutive sets of disappointing economic statistics this week should restrain the hawks on the Monetary Policy Committee from turning the present political and economic drama into a crisis. The pound lurched lower on Thursday, dropping below $1.30, after disappointing retail sales figures. The combination of a heat wave and the start of the World Cup soccer tournament failed to generate the expected surge in demand: The median forecast of economists surveyed by ...

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Germany’s Producer Price Inflation At 9-Month High

Germany’s producer prices climbed at the fastest pace in nine months in June, Destatis reported Friday. Producer prices grew 3 percent year-on-year in June, faster than the 2.7 percent increase logged in May. The annual rate matched economists’ expectations and was the fastest since September 2017. On a monthly basis, producer prices gained 0.3 percent, in line with forecast, after climbing 0.5 percent each in April and May. Excluding energy, producer prices gained 0.3 percent on month, taking the annual growth to 2 percent in June. Among components, energy prices ...

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China May Unleash Easing Tools Faster Than Expected, BNP Says

Beijing might unleash more easing measures and at a faster pace than the market expects, and the measures will likely be targeted, according to BNP Paribas. China’s leadership is determined to continue its debt-reduction campaign even at the cost of more economic pain, which is reflected in the preference for targeted easing rather than a broader loosening, according to Chi Lo, senior economist for greater China at BNP Paribas Asset Management. The world’s second-largest economy is being hammered by a brewing trade war, slowing growth, a bear equity market and ...

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UK PMI data suggests Q1 weakness was temporary – BoE’s Tenreyro

A recovery in business surveys suggests that weakness in Britain’s economy in the first three months of 2018 was related to unusually cold and snowy weather, a Bank of England rate-setter said in a newspaper interview published on Friday. “The PMIs (purchasing managers’ indexes) on output were positive and confirm in some sense the assessment that we had in our central forecast that the soft patch was snow-related,” Silvana Tenreyro told London’s Evening Standard. Asked if she was getting close to voting for a rate hike at the BoE’s next ...

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Donald Trump Is Pushing Europe Into Asia’s Embrace

With friends like these, it’s wise to look around for some new ones. Donald Trump has called the EU a “foe” and advised British prime minister Theresa May to sue the rest of the bloc over Brexit. The U.S. president has already levied tariffs on European steel, and is threatening to do the same on lots of other products, including cars. So it’s hardly a surprise that Europe’s leaders are turning eastward in search of new allies. This week, the EU has signed a landmark trade deal with Japan, known ...

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Some Trade War Winners Are Finding Ways to Lose

These should be jubilant times across the sprawling savanna of southeastern Brazil. Soybean is king here. And with the China-U.S. trade war pushing Chinese buyers to frantically search the globe for alternatives to American soy, Brazil is the most logical first stop. But not only are farmers not boosting sales to take advantage of this sudden jump in demand — and prices — they’re actually halting them. In an untimely twist that seems to epitomize everything that’s gone wrong with Brazil’s economy in recent years, the government imposed a rule ...

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Japan’s Inflation Inches Higher Thanks to Energy Costs

Japan’s inflation picked up slightly in June, largely because of higher energy costs. There was little to suggest price gains will accelerate toward the 2 percent target anytime soon. Highlights -Core consumer prices, which exclude fresh food, rose 0.8 percent in June from a year earlier (estimate 0.8 percent) -Stripping out fresh food and energy, prices climbed 0.2 percent (estimate 0.4 percent) -Overall prices increased 0.7 percent (estimate 0.8 percent) Key Takeaways Weakness in inflation has reduced speculation that the Bank of Japan may start tightening its ultra-loose monetary policy. ...

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