FocusEconomics Insights - Latest Posts

• How will the Fed reduce its balance sheet & and how will the ECB end QE? - 18 economic experts weigh in

  June 21, 2017

  If you have been following the financial and economic news of late, you’ll have probably heard the term “quantitative easing” quite a bit. You’ll likely have also heard a lot about central banks “unwinding" QE. Well, that is because after years of quantitative easing and otherwise accomodative monetary policy from some major central banks, it seems as though they are now looking to reverse course as global economic growth appears to be firming and inflation rising. This article will cover how the Fed and the ECB are likely to “unwind" QE. At the moment, however, there are more questions than there are answers, so we asked 18 economic experts for their thoughts on the matter. But before we get into that, to understand what unwinding QE really means, we'll have to explain what quantitative easing actually entails.

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• Gold: The Most Precious of Metals (Part 3)

  June 19, 2017

  Gold production in many countries, especially in developing or emerging markets, has declined in recent years as the global economy has largely improved since the global financial crisis. Many mining operations have shut down or downsized significantly. However, prices have been increasing in 2017 as safe haven buying has increased. In part 3 of our series on gold, we begin with a section explaining why the price of gold has been fluctuating in recent years. This is followed by a section on the history and news on gold production in each of the top gold producing economies globally in 2016 according to the United States Geological Survey as well as the 2017 economic outlook for each according to the FocusEconomics Consensus Forecast.

  

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  Tags: Commodities, Gold, precious metals

• Thoughts on "unwinding" QE from Frances Coppola

  June 19, 2017

  Major central banks around the world, like the U.S. Federal Reserve and the European Central Bank, are either on their way or at the very least contemplating reducing their balance sheets and raising interest rates after years of accomodative monetary policy. The Fed is further along in the process, aggressively tightening monetary policy having just last week raised interest rates for the third time in as many quarters. 

  Its plan to unwind its massive balance sheet of USD 4.5 billion accumulated during its six-year quantitative easing program from 2008 to 2014 will be put into action soon as well. The ECB, which began its own QE program in 2015, seems closer to ending QE with each monthly meeting as Eurozone inflation rises and economic growth firms up. 

  Both banks are at a crossroads as their respective decisions could be disastrous or come at just the right time. Recently, FocusEconomics contacted Frances Coppola, a regular contributor to Forbes and the author of the Coppola Comment finance & economics blog to get her comments on how both central banks should go about "unwinding QE."

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• The Fed and ECB at a crossroads: Unwinding QE

  June 13, 2017

  Last week, the European Central Bank dropped the easing bias from its communique, while the Federal Reserve's FOMC is meeting on 13-14 June with speculation high that they will raise rates yet again. After years of quantitative easing and low interest rates, the Fed and, to a lesser extent, the ECB appear to be ready to get out. Both central banks are at a crossroads as the decision to unwind QE could prove to be fatal or come at just the right time. 

  We asked Dr. Constantin Gurdgiev, who runs the blog True Economics as well as the website MacroView, for his thoughts on the matter. More specifically, how exactly will the Fed unwind its multi-trillion dollar balance sheet without severely upsetting the bond and equity markets and how will the ECB, which is still stuck in a quantitative easing cycle, be able to bring it to an end without plunging Eurozone countries into yet another financial crisis?

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• Spain: The economy that continues to silence the critics

  June 9, 2017

  One of the original PIGS, the Spanish economy continues to silence its critics, growing quarter after quarter. And in what is starting to become familiar territory for the Southern European country, the economy started 2017 off with a bang, dispelling fears of an abrupt slowdown in economic activity that some had expected due to the fading of several tailwinds. 

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  Tags: Economic Growth (GDP), European Union, Spain

• Latin America: The Most Unequal Region in the World

  June 6, 2017

  Latin America has the highest level of inequality in the world despite having made notable gains

  *Guest blog post from Latinoamerica21. 

  Income inequality in Latin America and the Caribbean declined substantially between 2002 and 2014. This is important because inequality is directly related to poverty reduction. If inequality remains stable, poverty can only be reduced by rising incomes, but if it falls, this increases the effect of increased incomes, which makes poverty even lower. In fact, an improvement in income distribution can reduce poverty, even though it does not increase incomes.

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  Tags: Latin America

• The History of OPEC: Has it been a Success?

  May 26, 2017

  Vienna, Austria is home to some of the most picturesque buildings and monuments in Europe, but there is one very important building in the city center that you would be forgiven for missing. That's the OPEC headquarters. Although perhaps not the greatest tourist attraction in Vienna, the headquarters building gives off an aura of organization and unity. However, one could argue that the Organization of the Petroleum Exporting Countries is anything but.

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  Tags: Oil

• FocusEconomics Announces 2017 Analyst Forecast Awards Winners

  May 25, 2017

  We are pleased to announce the winners of our 2017 Analyst Forecast Awards. The Awards recognize the most accurate forecasters for the main macroeconomic indicators across 87 countries and 29 commodity prices in 2016. Details of the awards and the list of winners are available at: www.focus-economics.com/awards.

  To identify the top economic forecasters, FocusEconomics assessed the accuracy of the forecasts submitted by over 350 institutions to its Consensus Forecast survey over the course of 24 months. Among the winning institutions are the world’s most renowned international banks and economic research firms such as BMI Research, Capital Economics, Citigroup Global Markets, Deutsche Bank, EIU, HSBC, JPMorgan and Oxford Economics, along with many others.

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  Tags: Consensus Forecast

• Latin America’s rising unemployment bucks nearly decade long trend

  May 22, 2017

  Urban unemployment rose at the fastest rate in over 20 years last year

  *Guest blog post from Latinoamerica21. 

  The deepening economic crisis in Latin America was evident last year, which marked the second consecutive year of contraction in the labor market with the urban unemployment rate rising from 7.3% in 2015 to 8.9%. This is the largest annual increase in more than two decades, influenced in particular by the deterioration of the Brazilian labor market, according to the report Coyuntura Laboral en América Latina y el Caribe from the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labor Organization (ILO). However, despite the poor data, levels of unemployment are still lower than in the late 1990s and early 2000s.

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  Tags: Latin America

• Escape from the Central Bank Trap by Daniel Lacalle

  May 18, 2017

  As reviewed by Dr. Caroline Gray, Senior Economics Editor at FocusEconomics

  To ease or not to ease? When the European Central Bank took the decision to embark on a massive quantitative easing program in early 2015, it seemed to have little other option. With heavily indebted governments across Western Europe coming under fire from their citizens suffering the brutal effects of austerity measures, politicians were practically begging for some room for maneuver. And with interest rates already pretty much as low as they could go, the ECB’s only way of responding to the clamor was to start injecting liquidity into the economy, buying up government debt and thereby lowering bond yields and alleviating some of the pressure on governments. 

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