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Nadia Gharbi

Nadia Gharbi

Nadia Gharbi is economist at Pictet Wealth Management. She graduates in Université de Genève, Les Acacias, Canton of Geneva, Switzerland Do not hesitate to contact Pictet for an investment proposal. Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

Articles by Nadia Gharbi

Rising downside risks to euro area growth

2 days ago

While our forecasts remain unchanged for now, external drags on growth prospects for the euro area look set to persist for longer than we had previously expected.
A potential improvement in euro area growth in H2 2019 on the back of a revival in the global economy is in jeopardy due to the intensifying trade dispute between the US and China. The euro area is not directly affected, but its indirect exposure to this dispute is not insignificant. Potentially weaker domestic demand in the US, China and the rest of Asia as a result of the trade dispute could mean that exports of euro area final goods to those countries also suffer. Unsurprisingly, Germany stands out as the most exposed country, not only in absolute terms

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Rising downside risks to euro area growth

2 days ago

While our forecasts remain unchanged for now, external drags on growth prospects for the euro area look set to persist for longer than we had previously expected.A potential improvement in euro area growth in H2 2019 on the back of a revival in the global economy is in jeopardy due to the intensifying trade dispute between the US and China. The euro area is not directly affected, but its indirect exposure to this dispute is not insignificant. Potentially weaker domestic demand in the US, China and the rest of Asia as a result of the trade dispute could mean that exports of euro area final goods to those countries also suffer. Unsurprisingly, Germany stands out as the most exposed country, not only in absolute terms but also relative to GDP.Aside from the US/China trade dispute, Europe

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No doubt remaining: German domestic demand is resilient

9 days ago

German activity has accelerated in the first quarter of the year on the back of a strong domestic economy.German GDP rose by 0.4% quarter-on-quarter in Q1, accelerating from a flat figure in Q4.The strong Q1 GDP growth is good news and confirms our long-held view that domestic demand remains resilient despite many external headwinds.The signal given by other data (factory orders, surveys) suggests that some negative payback is likely in Q2.The prospect of higher German growth (on average) in H2, driven by some reversal of weak global trade growth is in jeopardy following the intensification of the trade dispute between the US and China.Even if confined to the US and China, Germany would be impacted through uncertainty and trade spill overs.Of major importance is potential auto tariffs.

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French tax cuts designed to reboot Macron’s presidency

14 days ago

The French government’s respond to the ‘yellow vest’ protests could provide a meaningful boost to consumer spending, mostly next year.
Following a series of townhall meetings with French citizens up and down France, President Emmanuel Macron responded to social unrest with two doses of fiscal easing. The December package (worth EUR10bn) was incorporated in the stability plan sent to Brussels before Easter and is included in the 3.1% public deficit planned for this year. The measures announced in April after the ‘Grand Débat’ will mostly impact 2020, although some measures will already kick in in 2019.
While costly, the measures will enhance households’ purchasing power. Indeed, Q1 GDP data showed domestic demand

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French tax cuts designed to reboot Macron’s presidency

14 days ago

The French government’s response to the ‘yellow vest’ protests could provide a meaningful boost to consumer spending, mostly next year.Following a series of townhall meetings with French citizens up and down France, President Emmanuel Macron responded to social unrest with two doses of fiscal easing. The December package (worth EUR10bn) was incorporated in the stability plan sent to Brussels before Easter and is included in the 3.1% public deficit planned for this year. The measures announced in April after the ‘Grand Débat’ will mostly impact 2020, although some measures will already kick in in 2019.While costly, the measures will enhance households’ purchasing power. Indeed, Q1 GDP data showed domestic demand already improving on the back of household consumption, although some of that

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Euro area Q1 GDP growth could be stronger than expected

28 days ago

The general improvement in hard data holds out the possibility of a positive surprise when preliminary GDP figures are announced next week.Next week will be a busy one for Europe, with lots of data releases: European Commission business survey (April); advance GDP (Q1); M3 money supply (March); HICP flash estimate of inflation (April); and final manufacturing purchasing manager indices (PMIs, April). The advance Q1 GDP will be especially closely watched. No euro area GDP breakdown will be published, but we will have some clues on growth composition when euro area countries such as France publish their own GDP figures the same day (on Tuesday, 30 April).There have been some interesting developments in the euro area recently, notably the divergence between hard and soft data. Survey data

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Swiss Policy Mix Review

April 17, 2019

Despite a record of federal budget surpluses, don’t count on fiscal policy to relieve pressure on the SNB
The Swiss federal budget is governed by a strict expenditure rule, which is enshrined in the Constitution. Since its introduction, the ratio of public debt-to-GDP has been significantly reduced, falling back to its early-90’s level. At the close of 2018, the Swiss federal budget registered a significant surplus of CHF 2.9 billion, compared with budget projections for a surplus of CHF 295 million. Over the last 10 years, the Swiss government has consistently underestimated the federal budget surplus, with 2014 being the only exception.
Switzerland was lucky in the timing of the introduction of its fiscal rule,

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Swiss policy mix review

April 17, 2019

Despite a record of federal budget surpluses, don’t count on fiscal policy to relieve pressure on the SNBThe Swiss federal budget is governed by a strict expenditure rule, which is enshrined in the Constitution. Since its introduction, the ratio of public debt-to-GDP has been significantly reduced, falling back to its early-90’s level. At the close of 2018, the Swiss federal budget registered a significant surplus of CHF 2.9 billion, compared with budget projections for a surplus of CHF 295 million. Over the last 10 years, the Swiss government has consistently underestimated the federal budget surplus, with 2014 being the only exception.Switzerland was lucky in the timing of the introduction of its fiscal rule, right on the cusp of an economic upswing. Nevertheless, the Swiss government’s

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Switzerland: Lower growth, lower inflation

April 15, 2019

Growth and price rises should moderate in 2019.
The Swiss economy posted impressive GDP growth in 2018, although there was significant divergence between strong growth in the first half and stagnation in the second. Overall, we expect Swiss GDP to expand by 1.3% in 2019, down substantially from 2.5% in 2018. Risks to our growth outlook for Switzerland are tilted to the downside.
Looking ahead, we expect the Swiss economy to slow. Fundamentals supporting domestic demand remain solid, but the challenging global environment, especially the difficulties encountered by some key trading partners, are weighing on Swiss exports. Consumer price inflation should remain moderate in 2019. In the absence of any marked

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Switzerland: Lower growth, lower inflation

April 12, 2019

Growth and price rises should moderate in 2019.The Swiss economy posted impressive GDP growth in 2018, although there was significant divergence between strong growth in the first half and stagnation in the second. Overall, we expect Swiss GDP to expand by 1.3% in 2019, down substantially from 2.5% in 2018. Risks to our growth outlook for Switzerland are tilted to the downside.Looking ahead, we expect the Swiss economy to slow. Fundamentals supporting domestic demand remain solid, but the challenging global environment, especially the difficulties encountered by some key trading partners, are weighing on Swiss exports. Consumer price inflation should remain moderate in 2019. In the absence of any marked appreciation of the CHF, we forecast Swiss headline inflation to average 0.6% in 2019,

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Q&A on European Parliament elections

April 4, 2019

European Parliament elections, to be held between 23 and 26 of May, will be a key political event in Europe. However, we expect limited short-term impact, given the European Parliament’s limited ability to set Brussels’ agenda.
European Parliament (EP) elections will be a key political event in Europe, a form of ‘midterm election’ in which the electorates can state their approval or disapproval of their respective national governments. Turnout in EP elections has been on a downward trend over the past four decades, dropping from 62% to 43% since 1979. A crucial question is whether this downward trend will continue or not.
The EP is one of the EU’s three main decision-making institutions, the others being the

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Q&A on European Parliament elections

April 3, 2019

European Parliament elections, to be held between 23 and 26 of May, will be a key political event in Europe. However, we expect limited short-term impact, given the European Parliament’s limited ability to set Brussels’ agenda.European Parliament (EP) elections will be a key political event in Europe, a form of ‘midterm election’ in which the electorates can state their approval or disapproval of their respective national governments. Turnout in EP elections has been on a downward trend over the past four decades, dropping from 62% to 43% since 1979. A crucial question is whether this downward trend will continue or not.The EP is one of the EU’s three main decision-making institutions, the others being the European Commission and the Council of European Union (CEU; referred to in the

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Germany: signs of rebound ?

March 26, 2019

German growth may remain subdued in H1 2019, before picking up somewhat in H2 2019 as some near-term risks dissipate.
Germany’s leading indicator, the Ifo index, rose in March, driven by an increase in both sub-components: current assessment and expectations. The Ifo index differs in make-up from Markit’s purchasing manager indexes, but at the sector level, the story is the same: the more domestically driven services sector is showing signs of resilience, while the most export-oriented manufacturing sector is struggling.
The divergence between the manufacturing and services sectors is strikingas well as worrying. Germany’s manufacturing sector has been on a downward trend since August last year, dragging the entire

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Germany: signs of rebound ?

March 26, 2019

German growth may remain subdued in H1 2019, before picking up somewhat in H2 2019 as some near-term risks dissipate.Germany’s leading indicator, the Ifo index, rose in March, driven by an increase in both sub-components: current assessment and expectations. The Ifo index differs in make-up from Markit’s purchasing manager indexes, but at the sector level, the story is the same: the more domestically driven services sector is showing signs of resilience, while the most export-oriented manufacturing sector is struggling.The divergence between the manufacturing and services sectors is strikingas well as worrying. Germany’s manufacturing sector has been on a downward trend since August last year, dragging the entire economy down. There is no single explanation for this. Rather, the German

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German Economy Set to Recover

March 13, 2019

We expect German growth to pick up somewhat in the second half of the year, although we expect fiscal stimulus to remain limited.
Germany’s economy weakened significantly in the second half of 2018. External headwinds remain strong and, in an environment where monetary-policy ammunition remains limited, all eyes have shifted towards German fiscal policy, especially as the country has generated significant budget surpluses since 2011.
Beyond the already implemented 2019 fiscal stimulus, the country has fiscal space amounting to around 1% of GDP, or EUR34bn according to various fiscal rules.
Material fiscal easing would be a game-changer for us. This would support euro area and German demand growth. However, as things

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German economy set to recover

March 12, 2019

We expect German growth to pick up somewhat in the second half of the year, although we expect fiscal stimulus to remain limited.Germany’s economy weakened significantly in the second half of 2018. External headwinds remain strong and, in an environment where monetary-policy ammunition remains limited, all eyes have shifted towards German fiscal policy, especially as the country has generated significant budget surpluses since 2011.Beyond the already implemented 2019 fiscal stimulus, the country has fiscal space amounting to around 1% of GDP, or EUR34bn according to various fiscal rules.Material fiscal easing would be a game-changer for us. This would support euro area and German demand growth. However, as things stand, the slowdown has not been severe enough to see the government upping

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Euro area : What if car tariffs lie ahead ?

February 16, 2019

New US auto tariffs may impact the economy significantly more than the previous tariffs on steel and aluminium.
Among the key risks for our euro area outlook, the threat of US auto tariffs is of major importance.
The US Commerce Department’s investigation on national security threats posed by auto imports is due to be concluded on 17 February.
Given the complexity of the global auto supply chain, it is very complicated to isolate the effect of a one-off increase in US tariffs on European cars.
Using simple trade, elasticities and investment metrics, we try to gauge what could be the potential impact of auto tariffs on euro area growth.
We find that autos tariffs would reduce our annual euro area GDP growth by at

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Euro area : What if car tariffs lie ahead ?

February 14, 2019

New US auto tariffs may impact the economy significantly more than the previous tariffs on steel and aluminium.Among the key risks for our euro area outlook, the threat of US auto tariffs is of major importance.The US Commerce Department’s investigation on national security threats posed by auto imports is due to be concluded on 17 February.Given the complexity of the global auto supply chain, it is very complicated to isolate the effect of a one-off increase in US tariffs on European cars.Using simple trade, elasticities and investment metrics, we try to gauge what could be the potential impact of auto tariffs on euro area growth.We find that autos tariffs would reduce our annual euro area GDP growth by at least 0.2-0.3 percentage points. Consequences on the very exposed European car

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Exports save the day for French GDP growth

January 31, 2019

Prospects for French economic growth are looking up, but disruptions to consumption are possible.
French GDP rose by 0.3% quarter-on-quarter (q-o-q) in Q4, the same pace as in Q3. The details reveal that Q4 exports surged significantly, while household consumption and investment slowed. This left growth for the year at +1.5%, following +2.3% in 2017.

The breakdown of GDP data show that household consumption growth decelerated significantly, to 0.0% from +0.4%, with the disruption to Christmas sales around the “yellow vest” protests probably partly to blame. Public consumption growth accelerated a bit, increasing +0.2% q-o-q in Q4, after +1.0% in Q3, primarily due to a significant drop in business investment growth,

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Exports save the day for French GDP growth

January 30, 2019

Prospects for French economic growth are looking up, but disruptions to consumption are possible.French GDP rose by 0.3% quarter-on-quarter (q-o-q) in Q4, the same pace as in Q3. The details reveal that Q4 exports surged significantly, while household consumption and investment slowed. This left growth for the year at +1.5%, following +2.3% in 2017.The breakdown of GDP data shows that household consumption growth decelerated significantly, to 0.0% from +0.4%, with the disruption to Christmas sales around the “yellow vest” protests probably partly to blame. Public consumption growth accelerated a bit, increasing +0.2% q-o-q in Q4, after +1.0% in Q3, primarily due to a significant drop in business investment growth, which fell to +0.3% from +1.7%. Imports bounced back in Q4, growing by 1.6%

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Update on euro area economic activity

January 25, 2019

The balance of risks to growth in the region is still tilted to the downside.
The big question about the euro area economy is when the bottom of the slowdown will be reached. A rebound was already expected in Q4 2018, but at the start of this year there are still few signs of recovery. Flash composite PMI numbers for the region declined by 0.4 points to 50.7 in January, the weakest level since July 2013. New orders and new export orders remained weak and below the economic expansion threshold level of 50. French services PMI numbers fell further in January to 47.5 from 49.0 in December. On the other hand, the manufacturing PMI rose to 51.2 in January following its prior plunge. The German flash composite PMI rose to

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Update on euro area economic activity

January 25, 2019

The balance of risks to growth in the region is still tilted to the downside.The big question about the euro area economy is when the bottom of the slowdown will be reached. A rebound was already expected in Q4 2018, but at the start of this year there are still few signs of recovery. Flash composite PMI numbers for the region declined by 0.4 points to 50.7 in January, the weakest level since July 2013. New orders and new export orders remained weak and below the economic expansion threshold level of 50. French services PMI numbers fell further in January to 47.5 from 49.0 in December. On the other hand, the manufacturing PMI rose to 51.2 in January following its prior plunge. The German flash composite PMI rose to 52.1 in January on the back of strong services performance, but the

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European Central Bank likely to stick to script

January 21, 2019

The ECB is comfortable with current market expectations for rate hikes.
At its latest meeting in December, the ECB turned more cautious, lowering its growth forecasts but showing no sign of panic regarding the loss in euro area economic momentum. Risks were considered as “broadly balanced”, but moving to the downside. Since the December monetary policy meeting, data (PMI and national surveys, industrial production) have deteriorated further, notably in France and Germany. While risks have clearly shifted to the downside, the ECB might refrain from admitting this and emphasise the fact that some one-off factors are painting an overly dark picture of the current cyclical position. Thus, the ECB will likely acknowledge

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European Central Bank likely to stick to script

January 18, 2019

The ECB is comfortable with current market expectations for rate hikes.At its latest meeting in December, the ECB turned more cautious, lowering its growth forecasts but showing no sign of panic regarding the loss in euro area economic momentum. Risks were considered as “broadly balanced”, but moving to the downside. Since the December monetary policy meeting, data (PMI and national surveys, industrial production) have deteriorated further, notably in France and Germany. While risks have clearly shifted to the downside, the ECB might refrain from admitting this and emphasise the fact that some one-off factors are painting an overly dark picture of the current cyclical position. Thus, the ECB will likely acknowledge the deterioration in data, but wait for further evidence (data) before

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Concerns about Italy have not gone away

January 14, 2019

Rome and Brussels reached a compromise on the Italian government’s budget plans last month. But there are plenty of reasons for thinking this will be a challenging year for Italy.
After battling for more than two months over a 2019 budget plan defiantly non-compliant with the EU fiscal rules, Rome and Brussels struck a last-minute agreement in December that avoided opening an Excessive Deficit Procedure (EDP). To avoid the EDP, Italy had to backtrack on parts its initial plans for fiscal expansion to reduce the planned deficit for 2019 to 2.04% of GDP from 2.4%. For its part, the European Commission was once again forced to bend the EU fiscal framework: the new Italian budget draft now plans a zero change in the

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Germany is Stagnating

January 12, 2019

Sagging industrial production and confidence figures point to weak Q4 GDP.
German industrial production (including construction) fell by 1.9% month-on-month in November, extending the sector’s decline to five out the six last prints. Year on year, industrial production was down by 4.6%, the worst performance since November 2009.
While some idiosyncratic factors were likely at play, such as below-average water levels on the Rhine, which may have had an impact on energy production and chemical goods output, confidence surveys show that there is a clear underlying weakness in the German industrial sector. On a brighter note, hard data shows that production in the German automotive sector is slowly normalising after the

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Concerns about Italy have not gone away

January 11, 2019

Rome and Brussels reached a compromise on the Italian government’s budget plans last month. But there are plenty of reasons for thinking this will be a challenging year for Italy.After battling for more than two months over a 2019 budget plan defiantly non-compliant with the EU fiscal rules, Rome and Brussels struck a last-minute agreement in December that avoided opening an Excessive Deficit Procedure (EDP). To avoid the EDP, Italy had to backtrack on parts its initial plans for fiscal expansion to reduce the planned deficit for 2019 to 2.04% of GDP from 2.4%. For its part, the European Commission was once again forced to bend the EU fiscal framework: the new Italian budget draft now plans a zero change in the structural deficit (the previous document expected a deterioration), far from

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Germany is stagnating

January 10, 2019

Sagging industrial production and confidence figures point to weak Q4 GDP.German industrial production (including construction) fell by 1.9% month-on-month in November, extending the sector’s decline to five out the six last prints. Year on year, industrial production was down by 4.6%, the worst performance since November 2009.While some idiosyncratic factors were likely at play, such as below-average water levels on the Rhine, which may have had an impact on energy production and chemical goods output, confidence surveys show that there is a clear underlying weakness in the German industrial sector. On a brighter note, hard data shows that production in the German automotive sector is slowly normalising after the considerable disruption caused by the need to conform to the new worldwide

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ECB: Still Broadly Confident, but Caution Increasing

December 15, 2018

First rate hike still expected in September 2019, although downside risks are growing.
The ECB kept its key rates unchanged (i.e. the main refinancing at 0.00%; the marginal lending facility rate at 0.25% and the deposit rate at -0.4%), in line with consensus. The ECB’s forward guidance on interest rates was kept unchanged. The ECB expects its policy rates to “remain at their present levels at least through the summer of 2019”.
Given the tone of today’s meeting, we see no reason to contradict this view, which is the same as our own. We expect a first 15bp hike in the ECB’s deposit rate in September 2019, followed by a 25bp hike in all policy rates in December 2019. Nevertheless, as we have stressed many times before,

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Large downward revisions to the Swiss National Bank’s inflation forecasts

December 14, 2018

Fresh inflation projections likely to keep the central bank on the path of prudence.
The Swiss National Bank (SNB) left its monetary policy unchanged at its quarterly meeting today.
The main policy rate was left at a record low (-0.75%) and the central bank reiterated its currency intervention pledge.
Importantly, the SNB’s inflation forecasts for 2019 and 2020 were significantly revised down—another argument for the SNB to remain cautious and wait for the European Central Bank to start hiking its own policy rates.

Swiss Headline Inflation and SNB Inflation Forecasts 1999-2021 – Click to enlarge

Read full report here

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