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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

European Central Bank likely to stick to script

2 days ago

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

4 days ago

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

9 days ago

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

10 days ago

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

11 days ago

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

12 days ago

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

Related posts: Swiss

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ECB: still broadly confident, but caution increasing

December 13, 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, risks to this scenario are tilted towards a delayed lift-off given recent

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

December 13, 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.Read full report here

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French move to increase spending will raise eyebrows in Italy

December 11, 2018

New French deficit spending comes amid heated budget discussions between Brussels and Rome.The French President, Emmanuel Macron, has responded to the “yellow vest” protests with a dose of fiscal easing, mainly by bringing forward already planned measures. The spending package has four main building blocks: a tax exemption to incentivise employers for overtime pay; a tax break on overtime pay; a EUR100 increase in the minimum monthly wage; and  the cancellation of the 1.7% surcharge on pensioners earning less than EUR2000 per month. Some of the measures were already in Macron’s manifesto, and have merely been brought forward.According to government officials, the measures announced yesterday will cost EUR8-10bn (~0.4% of GDP). This comes on the top of the elimination of the planned fuel

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ECB Preview: an end to net asset purchases

December 10, 2018

With the ECB’s asset purchases due to end this month and forward guidance set to remain unchanged, a focus at next week’s policy meeting will be staff forecasts for growth and inflation.
At its Governing Council meeting next week, we expect the European Central Bank (ECB) to confirm that its asset purchases will cease at year’s end. However, it is likely to stress that the end of the net asset purchase programme does not represent a tightening of its policy stance. We also think the ECB will keep its forward guidance unchanged, with interest rates to remain at their present levels at least through the summer of 2019, or longer if necessary.
We continue to expect a first 15bp hike in the ECB’s deposit rate in

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ECB preview: an end to net asset purchases

December 7, 2018

With the ECB’s asset purchases due to end this month and forward guidance set to remain unchanged, a focus at next week’s policy meeting will be staff forecasts for growth and inflation.At its Governing Council meeting next week, we expect the European Central Bank (ECB) to confirm that its asset purchases will cease at year’s end. However, it is likely to stress that the end of the net asset purchase programme does not represent a tightening of its policy stance. We also think the ECB will keep its forward guidance unchanged, with interest rates to remain at their present levels at least through the summer of 2019, or longer if necessary.We continue to 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.

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Yellow vest protests cast cloud over Macron’s reform plans

December 6, 2018

Recent protests could have a negative impact on French growth, tax revenue and president Macron’s reform plans for his country and for Europe.French protests began on November 17 over hikes in fuel taxes, but have progressively broadened out into an expression of general anger with the French government about the cost of living and high taxes.To calm the situation, the government has dropped the planned fuel tax hike from next year’s budget.Whether or not this will be enough to satisfy the so-called ‘yellow vest’ protesters is unclear at this stage. The protestors’ ambitions now go far beyond fuel taxes to include demands for higher pensions, the repeal of other taxes and the restoration of the wealth tax abolished just last year.Emmanuel Macron was elected French president in 2017 on a

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Yellow vest protests cast cloud over Macron’s reform plans

December 6, 2018

Recent protests could have a negative impact on French growth, tax revenue and president Macron’s reform plans for his country and for Europe.
French protests began on November 17 over hikes in fuel taxes, but have progressively broadened out into an expression of general anger with the French government about the cost of living and high taxes.
To calm the situation, the government has dropped the planned fuel tax hike from next year’s budget.
Whether or not this will be enough to satisfy the so-called ‘yellow vest’ protesters is unclear at this stage. The protestors’ ambitions now go far beyond fuel taxes to include demands for higher pensions, the repeal of other taxes and the restoration of the wealth tax

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Growth Contraction puts pressure on Italian Government

December 4, 2018

The downward revision to 3Q GDP will make the Italian government’s targets more difficult to achieve and complicate the budget debate with Europe.
The Italian statistical office’s (ISTAT) final reading showed that the economy shrank 0.1% q-o-q (-0.5% q-o-q annualised) in Q3, whereas a preliminary reading on October 30 showed that growth was flat. The details were quite negative and confirmed the idiosyncrasy of the Italian economy. Unlikely other euro area economies, net trade contributed positively to growth as exports increased more than imports. However, domestic demand contracted significantly, with a negative print for both private consumption and investment. The decline in domestic demand was the worst since Q2

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Growth contraction puts pressure on Italian government

November 30, 2018

The downward revision to 3Q GDP will make the Italian government’s targets more difficult to achieve and complicate the budget debate with Europe.The Italian statistical office’s (ISTAT) final reading showed that the economy shrank 0.1% q-o-q (-0.5% q-o-q annualised) in Q3, whereas a preliminary reading on October 30 showed that growth was flat. The details were quite negative and confirmed the idiosyncrasy of the Italian economy. Unlikely other euro area economies, net trade contributed positively to growth as exports increased more than imports. However, domestic demand contracted significantly, with a negative print for both private consumption and investment. The decline in domestic demand was the worst since Q2 2014.Of note, as Italy is the euro area’s third-largest economy, this

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Surprise contraction in Swiss Q3 GDP

November 29, 2018

Switzerland’s growth unexpectedly contracted in the third quarter, pushing down our GDP growth forecast for 2018. Recent softening in the euro area also casts doubts about the pace of monetary tightening by the SNB.
The strong growth enjoyed by the Swiss economy since Q1 2017 came suddenly to an end in Q3 18, when real GDP shrank unexpectedly by 0.2% q-o-q (-0.9% q-o-q annualised). This is much lower than consensus expectations of +0.4% and is down from an average of +0.8% in H1 2018.
Details show that the contraction was mainly due to weak domestic demand and a sharp drop in exports.
Looking ahead, the strengthening of the Swiss franc, somewhat weaker euro area growth and uncertainty around global trade create a

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Surprise contraction in Swiss Q3 GDP

November 29, 2018

Switzerland’s growth unexpectedly contracted in the third quarter, pushing down our GDP growth forecast. Recent softening in the euro area also casts doubts about the pace of monetary tightening by the SNB.The strong growth enjoyed by the Swiss economy since Q1 2017 came suddenly to an end in Q3 18, when real GDP shrank unexpectedly by 0.2% q-o-q (-0.9% q-o-q annualised). This is much lower than consensus expectations of +0.4% and is down from an average of +0.8% in H1 2018.Details show that the contraction was mainly due to weak domestic demand and a sharp drop in exports.Looking ahead, the strengthening of the Swiss franc, somewhat weaker euro area growth and uncertainty around global trade create a challenging external environment for a small and open economy like Switzerland. On the

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Italy and the EU: a debt-based excessive deficit procedure

November 26, 2018

European Commission deems Italy’s budget noncompliant with EU rules.
This week, the European Commission issued its opinion on Italy’s budget plans. Deeming them noncompliant with the EU’s budgetary rules, it recommended that an Excessive Deficit Procedure (EDP) be opened.Of the options available to the EU, a debt-based EDP would be the most difficult for Italy to deal with, as it would last longer and require Italy to ensure its debt stock diminishes at “a satisfactory pace”.
On the positive side, following the EC’s report, both sides sounded willing to keep an open dialogue. But there is still wide divergence in views.At the end of the day, we think that market pressure and the ongoing cyclical deterioration in the

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Italy and the EU: a debt-based excessive deficit procedure

November 23, 2018

European Commission deems Italy’s budget noncompliant with EU rules.This week, the European Commission issued its opinion on Italy’s budget plans. Deeming them noncompliant with the EU’s budgetary rules, it recommended that an Excessive Deficit Procedure (EDP) be opened.Of the options available to the EU, a debt-based EDP would be the most difficult for Italy to deal with, as it would last longer and require Italy to ensure its debt stock diminishes at “a satisfactory pace”.On the positive side, following the EC’s report, both sides sounded willing to keep an open dialogue. But there is still wide divergence in views.At the end of the day, we think that market pressure and the ongoing cyclical deterioration in the economy will challenge the Italian government’s current stance more than

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German Q3 contraction: more than a blip?

November 16, 2018

German economy should rebound this quarter, but external demand poses a downside risk.Real GDP in Germany fell 0.2% q-o-q in Q3, compared with a 0.5% rise in Q2. This was below consensus and marks the first quarterly contraction in GDP since Q1 2015. The headline number looks horrible, but the market was prepared, as high-frequency data were already pointing in that direction.As usual, the Federal Statistical Office will release more detailed information on the GDP expenditure components on November 23. Analysis of the press release shows that growth was dragged down by net trade for the second quarter in a row in Q3. Exports fell while imports rose. There were mixed signals from domestic demand. While gross fixed capital formation both in machinery and equipment and in construction rose

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Italian government sticks to its 2019 deficit plan

November 14, 2018

The minor concessions continued in the revised plan presented to the European Commission are unlikely to dissuade Brussels from launching sanctions.
In a letter to the European Commission on 13 November, the Italian government confirmed that it would aim for a budget deficit at 2.4% of GDP in 2019 and reasserted its real growth forecast of 1.5% for next year. Rome made only minor concessions to Brussels’ demand that it revise its fiscal plan. It committed to raising its privatisation efforts to 1% of GDP in 2019. And to reassure the Commission on the 2.4% deficit, it hinted at introducing safety clauses to be triggered should the deficit look like going higher.
The question now is how the European Commission reacts

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Italian government sticks to its 2019 deficit plan

November 14, 2018

The minor concessions continued in the revised plan presented to the European Commission are unlikely to dissuade Brussels from launching sanctions.In a letter to the European Commission on 13 November, the Italian government confirmed that it would aim for a budget deficit at 2.4% of GDP in 2019 and reasserted its real growth forecast of 1.5% for next year. Rome made only minor concessions to Brussels’ demand that it revise its fiscal plan. It committed to raising its privatisation efforts to 1% of GDP in 2019. And to reassure the Commission on the 2.4% deficit, it hinted at introducing safety clauses to be triggered should the deficit look like going higher.The question now is how the European Commission reacts to the minor concessions made by the Italians. While Italy’s response is a

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Euro area’s fiscal policy to turn supportive of growth next year

November 12, 2018

SUMMARY
The Euro area’s fiscal stance will turn expansionary in 2019. Among the five biggest economies, this shift mainly reflects significant fiscal loosening in Germany, Italy and the Netherlands. France and Spain plan modest fiscal tightening, but less that what the European Commission (EC) demanded.
In Italy, the government budget plan represents a significant deviation from the EU’s fiscal rules. The outcome of arm wrestling between Rome and Brussels is still uncertain.
Euro area fiscal easing may be coming at the right time, as external downside risks are mounting and GDP growth so far in H2 2018 has been weaker than expected.

A heterogeneous fiscal stance
Euro area member states have all submitted their 2019

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Euro area’s fiscal policy to turn supportive of growth next year

November 9, 2018

Modest fiscal easing could help counter mounting external risks and slowing growth indicators.Euro area member states have all submitted their 2019 Draft Budgetary Plans (DBP) to the European Commission (EC) by now. These show that, collectively and based on EU Commission’s autumn forecasts, the euro area’s fiscal stance1 will turn supportive in 2019, although it varies significantly from one country to the next.Germany, Italy and the Netherlands are planning fiscal expansions, but Spain, France and Portugal have pledged to work towards further fiscal consolidation next year. Admittedly, there remain significant uncertainties as to whether these plans will be implemented and whether they will have the expected impact on growth. First, the fiscal loosening may turn out to be smaller than

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The Beginning of the End for Angela Merkel

November 4, 2018

The transition to new leadership in Germany could have implications for Europe as a whole.
As a consequence of the heavy drop of support in recent regional elections, Chancellor Merkel has declared she would not run again for leadership of the CDU at the 6-8 December party convention. Merkel also said she would retire from politics at the end of the current parliament in 2021. It is questionable whether she will get that far, and well before then, the transition to a new leader amid a loss of electoral support for the main centre-right and centre-left parties in Germany could have implications for the EU as a whole.
The leadership contest can be counted on to lead to intense internal debate about the CDU’s position

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Rebound in inflation data brings some relief to the ECB

November 2, 2018

Strong wage growth should support the recovery of euro area inflation in the coming months.
Euro area flash HICP rose from 2.1% year on year (y-o-y) in September to 2.2% in October, in line with expectations and the highest level since December 2012. Crucially, core inflation (HICP excluding energy, food, alcohol and tobacco) rebounded from 0.9% to 1.1% in October. Energy inflation rose to 10.6% y-o-y from 9.5% y-o-y in September. Food, alcohol and tobacco inflation eased, by 0.4 percentage points to 2.2%, primarily due to fresh food prices. Core inflation was mainly lifted by an increase in the price of services (1.5%, compared with 1.3% in September). The pick-up in services inflation was largely due to mechanical

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The beginning of the end for Angela Merkel

November 1, 2018

The transition to new leadership in Germany could have implications for Europe as a whole.As a consequence of the heavy drop of support in recent regional elections, Chancellor Merkel has declared she would not run again for leadership of the CDU at the 6-8 December party convention. Merkel also said she would retire from politics at the end of the current parliament in 2021. It is questionable whether she will get that far, and well before then, the transition to a new leader amid a loss of electoral support for the main centre-right and centre-left parties in Germany could have implications for the EU as a whole.The leadership contest can be counted on to lead to intense internal debate about the CDU’s position on Europe, taxes and immigration. So far, three main contenders to take over

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Rebound in inflation data brings some relief to the ECB

October 31, 2018

Strong wage growth should support the recovery of euro area inflation in the coming months.Euro area flash HICP rose from 2.1% year on year (y-o-y) in September to 2.2% in October, in line with expectations and the highest level since December 2012. Crucially, core inflation (HICP excluding energy, food, alcohol and tobacco) rebounded from 0.9% to 1.1% in October. Energy inflation rose to 10.6% y-o-y from 9.5% y-o-y in September. Food, alcohol and tobacco inflation eased, by 0.4 percentage points to 2.2%, primarily due to fresh food prices. Core inflation was mainly lifted by an increase in the price of services (1.5%, compared with 1.3% in September). The pick-up in services inflation was largely due to mechanical base effects in Germany (package holidays) and in Italy (education prices

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