Increasingly likely that the Spanish economy to slip back into recession at the end of the year as its weakest growth is now threatened by the slowdown in the global economy.
“Over the last three months increased economic uncertainty regarding the outlook for the global economy, which impacted negatively on the expected recovery of the Spanish economy”, said Institute the second largest Spanish bank in its economic review. So far, though weak (0.4 per cent in the first quarter and 0.2 percent in the second), the growth of Spanish economy remained in the green zone thanks to exports, amid weak household consumption in the context of record high unemployment. This picture, however, is threatened by the economic slowdown worldwide.
“The contribution of external demand continues to explain that the pace of growth is not negative, but the data suggest stagnation in the third quarter or in other words zero growth, experts predict.”
The Spanish Central Bank also provides zero growth in the third quarter. The first official details will be announced on 11th November. For the fourth quarter institute expects negative growth, keeping the signs in October.
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The shares of the European continent ended Friday’s session with an increased, reaching a 5-week high after better-than-expected employment figures in the U.S. in September supported hopes that the US economy is recovering. The Pan-European FTSEurofirst 300 ended with a growth of 0.7 percent at 946.98 points from – the highest of five weeks. The index, which jumped by 9% from the bottom on Tuesday, today rose above 50-day average for the first time since last July. The British FTSE 100 added 0.2 percent to 5303 points, the German DAX rose 0.5% to 5676 points, and France’s CAC 40 rose 0.7 percent to 3096 points. The investors’ moods were acknowledgments of data showing the U.S. economy has opened new 103 thousand jobs outside the agricultural sector in September, exceeding economists’ expectations of around 60 thousand and giving a signal that the world’s leading economy could avoid recession.
“We saw a major turnaround after the employment data. This is encouraging news for the U.S. economy and supports the notion that things are improving”, said Colin McLean, CEO of SVM Asset Management.

In the fight against debt crisis Italy will introduce tax “Solidarity” for Italians earning. This tax will amount to 5% for the Italians with annual incomes up to € 90,000. With income up to € 150,000 will be deducted 10%. Moreover, the retirement age of women in the private sector will be increased further in 2015 and not, as planned, in 2020 additional measures to stabilize the economy also include reducing the allocations to local governments a total of 9, 5 billion for two years and the financing of activities of the ministries of 8.5 billion. Planning and reduce the number of weekends. In Rome later tonight cabinet meets to approve the special plan. Financial markets are increasingly alarming to hear opinions whether the state can pay its obligations. The plan provides for additional spending cuts of 45 billion for the next two years so that by 2013 to achieve a balanced budget in accordance with the requirements of the European Central Bank (ECB). And this is not accidental. Italian debt reached a record value. In June they increased by 4.9 billion euros and so for the first time exceeded the limit of 1.9 trillion. Euro central bank said. Thus, obligations are well above 120 percent of gross domestic product. The same month a year earlier growth was almost 3.2%. Cabinet is aware of what measures to take in this case, said Financial Secretary Luigi Caserta shortly before the hearing before the channel TG4. Economic and Finance Minister Giulio Tremonti announced yesterday during the crisis called for an extraordinary session of parliament that will be taken further measures to save costs.
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The International Monetary Fund (IMF) has additional support from 71 billion dollars from the European Union (EU) and the participation of private investors with 33 billion EUR in order to ensure good status of the Greek debt, citing progress report of the Fund for the loan of Athens in May 2010. Under these circumstances, the Fund will loan the remaining 30 billion.
The IMF Greece will return to the bond markets as late as 2014, not 2012 as previously thought. Asked whether it was possible to attend the institution with greater resources, the head of the IMF mission in Greece Poul Thomsen stated in a telephone conference call to AFP, it is too early to consider such a thing. Fund unless it lowered its forecast for economic growth in Greece, and expects gross domestic product (GDP) of the country to shrink by 3.9% in 2011 compared to previously announced drop of 3%. In his report the IMF urges Europe to stop debate on Greece and to achieve greater private sector involvement to solve the Greek debt crisis. Meanwhile, the international rating agency Fitch lowered by three degrees of sovereign rating to CCC Greece, which is even lower status of “junk” (higher credit risk) and a degree before payment unavailability. Thus, Fitch joined the opinion of two other international agencies, Moody’s and Standard and Poor’s, which last month lowered the rating of the country to a similar level. However, this is negative news about Greece today is complete. European Commission launches investigation into whether the country has received illegal aid transmits AFP. The investigation will focus on the amount of 1.2 billion provided by the Greek state railway company TRANSOSE.
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The regulation of the European Union to tighten rules on derivative instruments will be agreed in advance by the early autumn of this year, after the crackdown on a global level to the opaque sector is faced with delay on both sides of the Atlantic. In 2009 world leaders from the G-20 agreed that the derivative instruments are traded through an intermediary or on a private basis between banks should be a centralized clearing and common register by the end of 2012, in order to limit risks of trade them that the financial crisis has exposed. Enormous amount of derivative instruments amounting to 600 trillion dollars is traded in London and New York, but while the EU and U.S. agree on objectives, the details require more time to close things. The banks hope for agreement in the EU this month to lift the fog on the new conditions of doing business. But center-right German Werner Langen told Parliament that the first vote on the text will be this week, so allow more time for negotiations with Member States entitled to vote. “I am optimistic that after the summer break we will be able to find very rapid solution,” said Lange.
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Overall, the month of May was negative for most of global markets including the markets of Central and Eastern Europe. Despite setbacks, however, we still do not think of them starts lasting downtrend, says a monthly analysis of Karoll Capital Management. The analysts said the management company’s medium-term outlook remains positive at this point. In the short term, however, can not be ruled out running down over the next 1-2 months, experts say.
The markets of Eastern and Central Europe
After a weak performance in April, most markets remained under pressure and in May. The negative trend for the month of global markets is formed after positive news that Osama bin Laden is finally killed. This news led to a brief euphoria after which global indexes were under pressure. The markets of Eastern Europe continued with the weaker performance compared to developed markets index and MSCI EFM Europe + CIS month ended with a loss of 4.8% (mostly due to a serious weakening in Russia and Turkey). Noted a sharp drop in Turkey, which was the leading CEE market in April – Turkish main index lost 9% over May 2011 Romanian Russian RTS and BET were also highly losers with declines of more than 7%. It is worth noting the good performance of both markets of the former Yugoslavia. Index BELEX 15 in Serbia rose by 10.7 percent in May due to increased interest in two recently listed on Companies (Nis Novi Sad and Aerodrom Nikola Tesla). At the end of the month even had a positive impact and the news of the capture of Ratko Mladic, with the chances for Serbia’s membership in the EU rose.
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The European indexes fell sharply Monday after new concerns about the debt crisis in Europe caused losses for banks and insurers and airlines suffered due to the eruption of a volcano in Iceland. The Stoxx Europe 600 fell 1.74 percent to 275 points, the least is known banks. Red, however, proved virtually all sectors. Wall Street also started the session with losses due to concerns over European debt. The Italian FTSE MIB fell 3.32 percent to 20,533 points after Friday Standard & Poor’s lowered the credit rating outlook on Italy to negative from stable, citing the risks about government plans to reduce debt levels. Standard & Poor’s credit rating left Italy at the current level. Also Friday, Fitch Ratings downgraded Greece. Greek ASE Composite fell 1.88 percent to 1297 points. On currency markets the euro fell against the dollar by 0.68 percent to 1.403 dollars.
“For the moment we have two main concerns,” said Christian Stocker, strategist at UniCredit Research. “The first is connected with Italy and lowering outlook on the rating of the country. This adversely affects the insurers and the banking sector.
The second concern of investors is related to the debt problems of Spain.
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The European securities lost achieved earlier in the day increases and closed trade on Thursday with a decline after Japan was registered with another earthquake. However, shares rose in Lisbon after Portugal’s decision to seek financial assistance. Stoxx Europe 600 index fell 0.3 percent to 280.78 points after a strong aftershock of magnitude 7.1 struck near the devastated northeast coast of Japan. Was issued a warning of the possibility of local tsunamis. The shares of banks in Portugal however managed to maintain growth rates achieved after the indebted country announced it would seek international financial assistance, such as Greece and Ireland. The stock prices of Banco Espirito Santo SA ended the session with a growth of 8.9 percent, and Banco BPI SA – 5,1%. European banks with the greatest exposure to the countries of the periphery were also stronger, as shares of Societe Generale rose 0.9 percent in Paris. The Portuguese PSI 20 index rose 1.2 percent to 7909 points. The stocks of Greek banks also registered strong gains after news of Portugal, as shares of National Bank of Greece rose by nearly 4%. Due to increases in the Greek ASE Composite rose 1.5% to 1 552.20 points. Overall, the markets did not react to expected rate rise by the European Central Bank, which raise the base rate to 1.25 percent from 1 percent. Bank of England announced earlier that it will leave interest rates unchanged.
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Supported by gains in banking, the European indexes ended Friday’s session of the green after the results of stress tests in Ireland did not bring surprises, and the data on unemployment in the U.S. contributed to the positive set. Stoxx Europe 600 rose 1.49 percent to 280 points, recouping losses from Thursday when the index lost pochti1%. For the first quarter of the year the pan-European index gained 0.03 percent.
“I would say that this is satisfactory because the results of yesterday’s Irish banks were more or less expected,” said Christian Stocker, strategist at UniCredit Research in Munich.
The markets in Europe rose after Wall Street grew at the opening of the Stock Exchange in New York. Recent statistics reveal that the agriculture sector in the U.S. were employed 216 thousand new employees, rather than analysts estimated 192 thousand unemployment rate fell to 8.8 percent from 8.9 percent in February. The investors watched the banking sector after the stress tests conducted by the Irish Central Bank showed that four Irish banks need new capital of EUR 24 billion to meet new capital requirements. The Irish government announced it would radically restructure the banking sector by reducing the number of local banks and group them in two.
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The US dollar rose against the euro for the third consecutive day after the attention of market participants again turned to the problem of indebted countries in the eurozone. After rating agency Moody’s has once again lowered the credit rating of Greece, the cost of servicing the debt of the country reached a new peak. The yield on the 10-year government bonds reached 12.95 percent, which is the highest level since the euro was introduced. The problem with the debt of Greece and other countries in the periphery of the euro raises the question whether any increase in interest rates will lead to re-recession in these countries. As a result, the currency pair EUR / USD ended the day with a decline to a level of 1.3967 dollars. The organization of Petroleum Exporting Countries (OPEC) began discussing the possibilities for increasing oil production. As a result of the Brent oil fell 1.45 percent to 113.37 dollars per barrel, while European and U.S. indexes ended yesterday’s session increases. These events support the dollar rose against most currencies. Against the yen, greenback rose 0.5 percent to 82.65 yen, and against the pound – up to 1.6156 dollars. UK economic data in recent days are certainly not supportive of sterling. Retail sales fell by 0.4 percent, while residential property prices – by 0.9%.
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