By Abdulselam Durdak
Frankfurt Letter, week beginning Oct. 17

Highlights in the Eurozone from last week

The latest Sentix data for the Euro area economy reported favorably. The headline index rose for the third time in a row to +8.5 points. Hence, according to investors, even the Eurozone's economy has now overcome the “Brexit” induced shock.

The index measuring economic expectations rose by +4 points to the highest reading in 2016 (+10.75 points) - a positive step forward. However, the economy remains just on a moderate recovery path.

There were also positive news on international trade and industrial production. The first estimate for euro area exports of goods to the rest of the world in August 2016 was €160.3 billion, an increase of 8 percent compared with August 2015 (€148.1 billion). Imports from the rest of the world stood at €141.9 billion, a rise of 4 percent compared with August 2015 (€136.9 billion).

As a result, the euro area recorded a €18.4 billion surplus in trade in goods with the rest of the world in August 2016, compared with +€11.2 billion in August 2015.

In August 2016 compared with July 2016, seasonally adjusted industrial production rose by 1.6 percent in the euro area and by 1.4 percent in the European Union, according to estimates from Eurostat, the statistical office of the European Union.

In July 2016 industrial production fell by 0.7 percent in both zones. In August 2016 compared with August 2015, industrial production increased by 1.8 percent in both zones.

- News from Germany

A study published on Monday by the German Macroeconomic Institute (IMK) suggests the rich and poor divide in Germany is deeper than it was 20 years ago.

According to study, from 1991 to 1995, 58 percent of poor people in Germany were able to increase their income; while from 2009 to 2013, less than 50 percent were able to do so.

According to the Federal Statistical Office (Destatis), consumer prices in Germany were 0.7 percent higher in September 2016 compared to September 2015. The inflation rate - as measured by the consumer price index - thus has gradually increased in the second half of the year.

In July and August 2016, the consumer price and inflation rate were each recorded as +0.4 percent, whereas an inflation rate of +0.7 percent was last recorded in May 2015.

Compared with August 2016, the consumer price index rose just slightly by 0.1 percent in September 2016.

Destatis, thus confirmed its provisional overall results of Sept. 29, 2016.

-The week ahead

This week markets will continue to monitor the developments on global markets. However, the European Central Bank's (ECB) rate decision and ECB President Mario Draghi's speech will be on the top of investors’ agendas.

Additionally, the Eurozone's September inflation will be released.




17 Oct,2016