By Abdulselam Durdak
Frankfurt letter, week beginning Dec. 5

- Euro area economy continues to expand at moderate steady pace

The European Central Bank (ECB) President Mario Draghi, said the euro area economy continues to expand at a moderate, but steady, pace while labor markets are gradually improving, notably in Spain.

Speaking at a conference in Spain, Draghi also added, "This gradual upward trend is expected to continue, not least owing to our monetary policy measures. But productivity growth has remained very subdued."


-Developments in Euro zone

Sentix Euro Break-up Index

According to the Sentix Euro Break-Index (EBI) survey, investors are preoccupied with the results of the Italian referendum.

Fears of more trouble in the Eurozone mount as Italy takes the spotlight in Sentix's monthly survey. Surprisingly, investors do not exclusively pick Italy as a potential exit candidate as the probabilities of an exit strategy in many euro member countries are on the rise. This has been seen especially in France and the Netherlands who have joined ranks with Italy. The sentix EBI increased to 24.1 percent.

According to Eurostat, the statistical office of the European Union, the euro area seasonally-adjusted unemployment rate was 9.8 percent in October 2016, down from 9.9 percent in September 2016 and from 10.6 percent in October 2015. This is the lowest rate recorded in the euro area since July 2009.

Eurostat also reported that the European Union (EU) unemployment rate was 8.3 percent in October 2016, down from 8.4 percent in September 2016 and from 9.1 percent in October 2015. This is the lowest rate recorded in the EU since February 2009.


-News from Germany

On Thursday, Dec. 1, Germany officially took over the G20 Presidency from China. The German Presidency will focus on global challenges such as the implementation of the Agenda 2030 of the UN and on how to deal with displacement and migration.

Under Germany’s presidency, traditional G20 themes, including the global economy and world trade will also be examined.

The G20 summit under the German Presidency will be held on July 7 to 8, 2017 in Hamburg. The 20 heads of state and government and top-level representatives of international organizations will potentially meet at Hamburg Messe, the city’s exhibition and trade fair center.

Some positive signals from labor markets have been seen. German unemployment fell in line with expectations in November, keeping the jobless rate in Europe's biggest economy at a record low, data from the Federal Labor Office showed on Wednesday.

According to date from the Federal Labor Office, the seasonally-adjusted jobless total fell by 5,000 to 2.658 million.

The adjusted unemployment rate remained at 6 percent, the lowest level since German reunification in 1990.


-The week ahead

This week, ECB's monetary policy meeting will be held on Thursday in Frankfurt where markets will closely monitor the rate decisions and any remarks made at the press conference.

According to experts, the ECB is likely to revise down its projection for the core inflation rate once again at its meeting and agree to extend the bond buying program.



05 Dec,2016