By Abdulselam Durdak
Frankfurt letter, week beginning August 15

- Eurozone economic growth slows in second quarter

Seasonally adjusted GDP rose by 0.3 percent in the euro area and by 0.4 percent in the European Union (EU), during the second quarter of 2016, compared with the previous quarter, according to a flash estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2016, GDP grew by 0.6 percent and 0.5 percent respectively.

This matches the initial estimate but it is a slowdown from the first quarter’s growth of 0.6 percent.

 - Brexit remains primarily a European problem

Britain stands to suffer the most from the Brexit in economic terms, although other European Union countries – and especially Ireland – will also be negatively impacted.

The Brexit is hardly expected to have any impact on North America, the Middle East and the Commonwealth of Independent States (CIS) states, according to the results of a special question featured in the Institute for Economic Research (Ifo) World Economic Survey of 762 experts from 112 countries conducted over the period from July 1, 2016 to July 27, 2016.

- News from Germany

According to figures of the Federal Statistical Office (Destatis), the German economy continues to grow. In the second quarter of 2016, the gross domestic product (GDP) rose 0.4 percent on the first quarter of the year after adjustments for price, seasonal and calendar variations. At the beginning of the year 2016, a strong GDP growth of 0.7 percent had been recorded.

On the other hand, Destatis in its provisional overall results of July 28, 2016 showed that consumer prices in Germany were 0.4 percent higher in July 2016 compared with July 2015. The inflation rate as measured by the consumer price index increased slightly for the third consecutive month. This year, a somewhat higher rate than in July 2016 was measured in January (+0.5 percent). In July 2016, compared with June, the consumer price index rose by 0.3 percent.

-The week ahead

This week, the focus will be on the accounts of the monetary policy meeting of the European Central Bank's Governing Council held on July 20-21, 2016.

Investors will also closely monitor the developments of European banks.

On the data side, inflation, international trade in goods and production in construction will top the agenda for the markets.


15 Aug,2016