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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

German Q3 contraction: more than a blip?

2 days ago

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

4 days ago

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

4 days ago

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

6 days ago

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

9 days ago

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

14 days ago

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

16 days ago

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

17 days ago

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

18 days ago

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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Euro area’s initial growth figures for Q3 prove disappointing

18 days ago

While growth in France rebounded, Italy stalled in Q3. Our full-year forecast for the euro area remains unchanged but is clearly at risk.
According to initial estimates, growth in the euro area slowed in Q3 to 0.2% q-o-q (quarter on quarter) from 0.4% in Q2. These latest GDP results were below consensus expectations and our own forecast. This was the weakest quarterly growth figure for the euro area since Q2 2014 and marks the widest divergence vis-à-vis the US since 2015.
Advanced estimates showed that French real GDP rebounded in Q3, so that French GDP growth is back where it should be at this stage of the economic cycle after a sluggish first half of the year affected by a series of temporary factors (strikes,

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Euro area’s initial growth figures for Q3 prove disappointing

19 days ago

While growth in France rebounded, Italy stalled in Q3. Our full-year forecast for the euro area remains unchanged but is clearly at risk.According to initial estimates, growth in the euro area slowed in Q3 to 0.2% q-o-q (quarter on quarter) from 0.4% in Q2. These latest GDP results were below consensus expectations and our own forecast. This was the weakest quarterly growth figure for the euro area since Q2 2014 and marks the widest divergence vis-à-vis the US since 2015.Advanced estimates showed that French real GDP rebounded in Q3, so that French GDP growth is back where it should be at this stage of the economic cycle after a sluggish first half of the year affected by a series of temporary factors (strikes, weather and timing of fiscal policy). The details were pretty good, with

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Credit Conditions in the Euro Area Remain Supportive of Investment Recovery

20 days ago

We are sticking to our forecast of 2.0% euro area GDP growth for 2018, but with risks tilted to the downside.
Investment is an important driver of the business cycle and a key determinant of potential growth. In the euro area, total investment makes up about 20% of GDP. Construction, machinery and equipment (including weapons systems), intellectual property rights and agricultural products account, respectively, for 48%, 32%, 18% and 2% of total investment. Machinery and equipment spending occurs largely in the corporate sector and is hence a close proxy for business investment.
Total investment contracted significantly during the financial crisis and in the worst of the euro crisis in 2011-2012. The steep decline

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Credit conditions in the euro area remain supportive of investment recovery

23 days ago

We are sticking to our forecast of 2.0% euro area GDP growth for 2018, but with risks tilted to the downside.Investment is an important driver of the business cycle and a key determinant of potential growth. In the euro area, total investment makes up about 20% of GDP. Construction, machinery and equipment (including weapons systems), intellectual property rights and agricultural products account, respectively, for 48%, 32%, 18% and 2% of total investment. Machinery and equipment spending occurs largely in the corporate sector and is hence a close proxy for business investment.Total investment contracted significantly during the financial crisis and in the worst of the euro crisis in 2011-2012. The steep decline during these periods was the consequence of lower corporate spending and a

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Gloomy Signals for Euro Area Manufacturing

24 days ago

Weakness in the sector signals continuing downward trend.
The euro area economy started the fourth quarter on a weak note; the flash composite PMI dipped to 52.7 in October from 54.1 in September. Both manufacturing and services showed a notable loss of momentum. A common feature in France and Germany was the weakness in manufacturing, where both countries posted similar declines. Part of the drop may reflect issues in the car industry, but trade tensions, uncertainty over Brexit and geopolitical worries all weighed on manufacturers’ sentiment as well.
Of particular note was the loss of momentum in the German services sector. This was due to a marked decline in new business and a significant drop in business

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Gloomy signals for euro area manufacturing

25 days ago

Weakness in the sector signals continuing downward trend.The euro area economy started the fourth quarter on a weak note; the flash composite PMI dipped to 52.7 in October from 54.1 in September. Both manufacturing and services showed a notable loss of momentum. A common feature in France and Germany was the weakness in manufacturing, where both countries posted similar declines. Part of the drop may reflect issues in the car industry, but trade tensions, uncertainty over Brexit and geopolitical worries all weighed on manufacturers’ sentiment as well.Of particular note was the loss of momentum in the German services sector. This was due to a marked decline in new business and a significant drop in business expectations, which reached their lowest point since 2014. Overall, the composite

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Portugal’s growth rate surpasses pre-crisis level

October 19, 2018

September growth and unemployment rates show how far it has come.In two decades, Portugal has gone through a boom (1996-2001), a slump (2002-2007), a deep recession (2008-2013), a timid recovery (2014-2016) and now a robust economic expansion. In 2017, real GDP grew by 2.8%, its fastest pace since 2000. This is even more remarkable when considering that the country exited its bailout programme only in mid-2014. Investment and robust exports were the main growth drivers in 2017.Starting in 2018, the pace of growth slowed down somewhat, mainly due to weaker net exports, similar to other euro area countries. Part of the moderation was also explained by temporary factors, such as bad weather conditions affecting construction activities. Of note, the country surpassed its pre-crisis level in

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Bumpy Road Ahead for Italian Budget

October 19, 2018

Rome’s budget plans put it on a collision course with the European Commission.
The Italian government has submitted its 2019 draft budget plan (DBP) to the European Commission. The proposed DBP is not in line with European Union rules and sets the government on a collision course with the European authorities.
Several elements within the Italian government’s budget plan have been raising eyebrows. First, the plans’ economic assumptions seem too optimistic to us, and there is a risk that the budget deviates from its owns deficit targets. Second, the budget’s composition appears insufficient to overcome Italy’s structural problems. Third, the budget plans put Italy’s government on a collision course with Europe,

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Devil is in the details: Italian and French deficits are not quite comparable

October 16, 2018

Italy’s structural weakness explain higher level of concern around its deficit target.
Each EU member state is currently preparing 2019 budget plans for formal submission to the European Commission (EC) before mid- October. Among them, France and Italy’s budget plans have been raising eyebrows. Why is the EC concerned about Italy’s proposed 2.4% GDP deficit target for 2019 and not France’s target of 2.8%? Is Italy being treated unfairly by its European partners and by markets? Italy and France both have high public debts (133.4% of GDP and 97.7% of GDP, respectively, in Q1 2018) so some argue that the difference in public debt is “not so big”.
But a deeper look is required to form a precise idea of the difference

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Devil is in the details: Italian and French deficits are not quite comparable

October 12, 2018

Italy’s structural weakness explain higher level of concern around its deficit target.Each EU member state is currently preparing 2019 budget plans for formal submission to the European Commission (EC) before mid-October. Among them, France and Italy’s budget plans have been raising eyebrows. Why is the EC concerned about Italy’s proposed 2.4% GDP deficit target for 2019 and not France’s target of 2.8%? Is Italy being treated unfairly by its European partners and by markets? Italy and France both have high public debts (133.4% of GDP and 97.7% of GDP, respectively, in Q1 2018) so some argue that the difference in public debt is “not so big”.But a deeper look is required to form a precise idea of the difference between the two countries.First of all, while France has committed to tighten

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Squaring off over the Italian budget

October 10, 2018

The Italian government’s budget plans set it on a collision course with the European Commission. The road to some kind of agreement is likely to be long and bumpy.
The Italian government has confirmed its deficit target at 2.4% of GDP for 2019. This represents significant slippage from a previous budget deficit target of 0.8% in 2019. The deficit target has been set at 2.1% for 2020 and 1.8% for 202. But it is not the headline deficit numbers that are a problem, but rather the details behind them and the path the current coalition government is taking.
As things stand currently, the European Commission is likely to ask Italy to send a revised draft budget. If Italy’s government does not comply with a revised budget,

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Squaring off over the Italian budget

October 9, 2018

The Italian government’s budget plans set it on a collision course with the European Commission. The road to some kind of agreement is likely to be long and bumpy.The Italian government has confirmed its deficit target at 2.4% of GDP for 2019. This represents significant slippage from a previous budget deficit target of 0.8% in 2019. The deficit target has been set at 2.1% for 2020 and 1.8% for 202. But it is not the headline deficit numbers that are a problem, but rather the details behind them and the path the current coalition government is taking.As things stand currently, the European Commission is likely to ask Italy to send a revised draft budget. If Italy’s government does not comply with a revised budget, the European Commission could sanction Italy or could decide to open an

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German September PMIs surprisingly weak

October 9, 2018

Blame the German automotive industry for the fall in manufacturing orders.
Recent German soft and hard data in the manufacturing sector has been surprisingly weak. Data released today showed that the final manufacturing PMI fell to 53.7 in September, from 55.9 in August. Factory orders rose by 2.0% month-on-month (m-o-m) in August, having contracted for six out of the seven previous months. The increase in August factory orders data puts the Q3 carry over at -1.4% q-o-q, slightly improving from the decline in manufacturing orders observed in Q2.
Weak external demand, problems in emerging markets and global trade uncertainties are among the factors explaining the poor performance of the German industrial sector since

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German September PMIs surprisingly weak

October 5, 2018

Blame the German automotive industry for the fall in manufacturing orders.Recent German soft and hard data in the manufacturing sector has been surprisingly weak. Data released today showed that the final manufacturing PMI fell to 53.7 in September, from 55.9 in August. Factory orders rose by 2.0% month-on-month (m-o-m) in August, having contracted for six out of the seven previous months. The increase in August factory orders data puts the Q3 carry over at -1.4% q-o-q, slightly improving from the decline in manufacturing orders observed in Q2.Weak external demand, problems in emerging markets and global trade uncertainties are among the factors explaining the poor performance of the German industrial sector since the beginning of the year. But there is also another factor that has been

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Italy tests the EU’s tolerance

October 2, 2018

The populist government’s plans to increase the deficit could set it on a collision course with Brussels. We remain bearish Italian bonds and euro peripheral bonds in general.
Leaders of Italy’s coalition government and the finance minister yesterday agreed on a 2.4% GDP deficit target. The new target is higher than our expectation of a deficit “above but close to 2.0%” in 2019. For us, the key issue is not so much the deficit figure in itself, but more the fact that the government plans the same 2.4% deficit for next three years (2019-21). Such deficit targets are unlikely to be welcomed by the European Commission.
Currently, we have limited visibility on the assumptions used in the government’s projections for the

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A bit too early to be worried about French consumers

September 29, 2018

Despite the recent fall in French consumer confidence, spending should pick up in the second half of the year.
The French economy disappointed in the first half of this year. While there was a widespread ‘soft patch’ in the euro area, the source and size of the slowdown in France stands out. The real GDP growth rate fell by 0.5 points, much more than the rest of the euro area. Moreover, while the slowdown in the other countries was mainly due to net trade, in France weakening in household’s expenditure also contributed.
French households have been hit on several fronts this year: real wages have been dented by higher headline inflation, front-loaded tax hikes and uncertainty over labour market reforms have all played

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A bit too early to be worried about French consumers

September 28, 2018

Despite the recent fall in French consumer confidence, spending should pick up in the second half of the year.The French economy disappointed in the first half of this year. While there was a widespread ‘soft patch’ in the euro area, the source and size of the slowdown in France stands out. The real GDP growth rate fell by 0.5 points, much more than the rest of the euro area. Moreover, while the slowdown in the other countries was mainly due to net trade, in France weakening in household’s expenditure also contributed.French households have been hit on several fronts this year: real wages have been dented by higher headline inflation, front-loaded tax hikes and uncertainty over labour market reforms have all played a role in curbing consumer spending. Moreover, spending on utilities was

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Credit Growth Remains Buoyant in the Euro Area

September 28, 2018

Financial conditions remain supportive and are not expected to tighten much in the coming months.
Lending to non-financial corporations in the euro grew by an annual 4.2% in August, its fastest rate since April 2009. Forward-looking indicators suggest that euro area credit growth should remain strong over the coming months.
Overall, domestic demand is likely to continue to be the main driver of growth in the euro area, helping to mitigate external weakness. Strong job growth combined with rising wages should continue to underpin household spending while accommodative financing conditions should further support investment.
All in all, the European Central Bank’s M3 and credit report for August confirms that lending

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Credit growth remains buoyant in the euro area

September 27, 2018

Financial conditions remain supportive and are not expected to tighten much in the coming months.Lending to non-financial corporations in the euro grew by an annual 4.2% in August, its fastest rate since April 2009. Forward-looking indicators suggest that euro area credit growth should remain strong over the coming months.Overall, domestic demand is likely to continue to be the main driver of growth in the euro area, helping to mitigate external weakness. Strong job growth combined with rising wages should continue to underpin household spending while accommodative financing conditions should further support investment.All in all, the European Central Bank’s M3 and credit report for August confirms that lending dynamics continue to be in a good shape in the euro area. Financial conditions

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Business Indicators Present a Contrasting Picture of the Euro Area

September 24, 2018

The services sector is proving resilient, but manufacturing disappoints.
Euro area flash composite PMI dipped slightly to in September and came in slightly below consensus expectations. Activity in services picked up and weakened further in manufacturing, which continued its decline since the start of the year, falling to 53.3 in September from 54.6 in August. New export orders failed to grow for the first time since June 2013.
Overall, euro area composite PMI remains consistent with our forecast of 2% GDP growth in 2018. But growth outside of Germany and France improved only marginally from August’s 22-month low, rounding off the worst quarter for business sentiment in the euro area in two years.
In Germany, the PMI

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Cut to Swiss inflation forecast

September 23, 2018

The Swiss National Bank has revised down its medium-term forecast for consumer inflation. We still expect a first SNB rate hike in September 2019.
At the end of its quarterly monetary assessment meeting, the Swiss National Bank (SNB) left its main policy rates unchanged. Also unchanged from the last quarterly meeting in June was the central bank’s assessment of the Swiss franc as “high valued” and its characterisation of the situation on foreign exchange as “fragile”. The SNB emphasized that the Swiss franc had appreciated noticeably against major currency as well as against emerging currencies, and reiterated that it was willing to intervene in the foreign exchange market in order to keep the value of the Swiss

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