Daily Overview of Global Markets & the SEE Region (Wednesday, 24 July, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: As expected, Eurosceptic Boris Johnson was declared yesterday the winner of the Conservative leadership contest and consequently, the new UK’s Prime Minister. Amid mounting no-deal Brexit fears, the GBP remained under pressure, especially against the USD. Meanwhile, the USD retained a firm tone against all G10 peers following the agreement earlier this week between the leadership of Congress and representatives of the US government to suspend the debt ceiling and boost government spending for the next two fiscal years. German Bund yields remained in a downward trend while EMU sovereign bonds outperformed Bunds on the day, especially Italy followed by Spain in spite of domestic political jitters. Looking at today’s calendar, the main release is the flash manufacturing and services PMIs for the month of July out of the Eurozone.
GREECE: The government is looking into ways to increase fiscal space considering among others cutting expenditure in Ministries and SOEs and broadening the tax base through the increased usage of electronic payments. Another option that is reportedly being examined is adding the SMP/ANFA income to the calculation for the primary surplus a decision which, however, requires agreement with the institutions. Meanwhile, the first tax bill is expected to be tabled to Parliament on Friday and to be voted by 1 August.
SOUTH EASTERN EUROPE
CESEE MACRO DEVELOPMENTS: The IMF published yesterday the World Economic Outlook Update according to which global growth remains subdued, with GDP growth expected at 3.2% YoY in 2019 and picking up to 3.5% YoY in 2020. Regarding emerging and developing economies the GDP growth rate for the years 2019 and 2020 is seen at 4.1% YoY and 4.7% YoY respectively, downwards revised by 3bps for 2019 and 1bp for 2020 compared to the spring outlook. A day earlier, the IMF published the staff report for the 2019 article IV consultation along with the second review under the policy coordination instrument both for Serbia. In a nutshell, the near-term outlook remains positive with economic growth projection for 2019 remaining stable to 3.5%.
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