Frankfurt Letter, week beginning May 2

-The European Central Bank (ECB)

Speaking at the annual meeting of the Asian Development Bank in Frankfurt on Monday, ECB President Mario Draghi said the global low interest rate environment is a symptom of challenges in the world economy, not its cause.

"If interest rates are to rise again to sustainably higher levels, it is those underlying causes that need to be addressed. This is true at a global level, and it is true in the euro area" he said.


-Economic data

In terms of economic data, the euro zone showed a mixed picture on Friday.

Seasonally adjusted gross domestic product (GDP) rose by 0.6 percent in the euro area and by 0.5 percent in the European Union during the first quarter of 2016, compared with the previous quarter, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union.

Meanwhile, the euro area seasonally-adjusted unemployment rate was 10.2 percent in March 2016, down from 10.4 percent in February 2016. This is the lowest rate recorded in the euro area since August 2011.

However, bad news came from inflation data. The euro area’s annual inflation was expected to have a negative inflation rate of -0.2 percent in April 2016, which was realized, down from 0.0 percent in March


-News from Germany

A strike of the labor union Ver.di at major German airports caused hundreds of cancellations and delays of flights to and from Germany on Wednesday. German airlines Lufthansa, Air Berlin, Turkish Airlines and Pegasus canceled hundreds of flights.

The strike was called at Frankfurt, Munich, Dusseldorf, Cologne, Bonn, Dortmund and Hanover airports.

Ver.di, one of Germany's biggest labor unions, is demanding a 6 percent wage increase for some 2 million public service employees it represents. It is also calling for a pay increase of 100 euros per month for trainees.

German companies plan to recruit more staff according to Munich-based Institute for Economic Research, the Ifo Institute.

"After three consecutive decreases, the Ifo Employment Barometer rose to 108.1 points in April from 107.4 points in March. The employment dynamic gained impetus," said Ifo in a report.

-The week ahead

This week, global markets will monitor the Eurozone's industrial producer prices, retail trade and industrial production data as well as flash estimate European Union and euro area GDP figures.

The annual meeting of the Asian Development Bank was held on Monday in Frankfurt where both ECB President Mario Draghi and Germany's Chancellor Angela Merkel gave speeches.

03 May,2016