By Abdulselam Durdak
Frankfurt letter, week beginning Sept. 26

- ECB policies have not solved growth problems yet

European Central Bank's (ECB) monetary policies, including ultra low interest rates and a quantitative easing program, have not yet cured price instability and sluggish growth in the Euro zone.

Global trade is likely to remain weak in the coming years, according to a monthly report by the ECB.

While global trade grew on average about twice as fast as global output prior to the financial crisis, the ratio of imports to world GDP has largely stagnated over the past five years and probably will remain at current levels, according to the ECB’s report.


- Markit Flash Eurozone PMI

The flash estimate of Markit’s Eurozone PMI Composite Output Index slipped to 52.6, down from 52.9 in August, a 20-month low.

The average index reading over the third quarter (52.9) is below that of quarter two (53.1), also suggesting that the economy is losing, rather than gaining, momentum.


- News from Germany

The Bundesbank in its monthly report warned that the German economy could slow in the third quarter primarily due to weak manufacturing export demand.

"After robust growth in the spring, Germany's economy is likely to expand somewhat more slowly in the third quarter of 2016," the central bank said in the report.


- Poverty risk in western Germany higher than 10 years ago

In 2015, the at-risk-of-poverty rate was higher than in 2005 in all western Lander except Hamburg.

The Federal Statistical Office (Destatis) also reports that over the past ten years, the poverty risk rose most markedly in Nordrhein-Westfalen, where it increased 3.1 percentage points to 17.5 percent from 2005.

 Berlin with plus 2.7 percentage points and Bremen with plus 2.5 percentage points also recorded above average increases in poverty risk in 2015 compared with 2005.


-The week ahead

This week, markets will continue to monitor the ECB's Governing Council Members’ speeches, and it is possible that some new monetary policy signals from members will be seen.

On the data side, unemployment data and the flash estimate Euro area inflation will be on the top of the markets’ agenda.


26 Sep,2016