In a historic moment for the European Central Bank, president Mario Draghi announced last Thursday that the central bank will halt its €2.6 trillion stimulus programme in January despite concerns that the eurozone is predicted to slow down over the next couple of years.
Without specifically mentioning the US-China trade war, Brexit or the Italian government’s budget dispute with Brussels, Draghi said that growth in the common currency area would be limited to 1.7 per cent in 2019, “owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.
In the UK, the economy lost momentum in the three months to October, as a contraction in the manufacturing sector and falling car sales put a lid on growth, amid continuing Brexit uncertainty.
Figures released by the Office for National Statistics showed that GDP grew by 0.4 per cent in the three months to October. This was slower than the 0.6 per cent expansion seen in the September quarter.
The latest rate of growth was in line with economists’ expectations. Growth slowed across all the important sectors of the economy from the quarter though September. Compared to the same quarter last year, growth came in at 1.4 per cent.
Finally, in the US, producer prices unexpectedly showed a minimal increase in November, as the sharp fall in the prices of crude oil limited the rise of energy costs.
The headline producer price index – an indicator of insipient consumer inflation – rose by a mere 0.1 per cent on a month-over-month basis last month, according to data from the Labour Department. This was a sharp decline from the 0.6 per cent pace seen in October, which was the fastest rate in six years.
The November figure was marginally higher than analysts’ average forecast for no change. The year-on-year rate slowed to 2.5 per cent from 2.9 per cent.
The latest producer price reading, coming after a mixed employment report last week, could support the argument for Federal Reserve policymakers to take a more cautious stance on interest rate hikes.
This report was compiled by Bank of Valletta for general information purposes only.