Sandy, the hurricane that hit the US East Coast last week, caused a lot of damage. Direct damage is estimated at around $20 billion; while if one includes the indirect damage, such as the reduced economic activity, to this figure, the estimates go up to between $30-$50 billion.

Having said this, Sandy is expected to have only a small impact on the economy, especially in view of the fact that Hurricane Katrina, which had caused much more damage, only caused a temporary glitch.

Meanwhile, the cost of living in the euro area eased slightly in October, as consumer price inflation in the 17 countries using the single currency increased by 2.5 per cent from the same month the previous year.

This reading was slightly down from the 2.6 per cent gain registered in September, but is still above the ECB’s target of below but close to two per cent. The main contributors of this increase were the higher energy and food prices. Meanwhile, unemployment in the area rose to a high of 11.6 per cent in September, the highest since records began. The highest unemployment rate was registered in Spain with a reading of 25.8 per cent, while Austria had the lowest rate at 4.4 per cent.

Finally, the Spanish GDP declined by 0.3 per cent during the third quarter of this year, compared to a 0.4 per cent decline in the three months to June. This was the fifth consecutive quarter that the Spanish economy registered a contraction, undermining efforts to stem the country’s budget deficit.

In the meantime, inflation increased by 3.5 per cent from a year earlier. This follows an increase in the value-added tax rate in September as a part of the government’s €100 euro austerity programme.

This report was compiled by Bank of Valletta plc for general information purposes only.