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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

A truce between Rome and Brussels

11 days ago

For now, Italy has avoided Brussels’ Excessive Deficit Procedure. But tensions are set to rise again in the autumn when Italy presents its 2020 budget package.
In its mid-year budget revision, the Italian government lowered its 2019 deficit target. The government pointed to better-than-expected revenues for this revision, including tax revenues that were EUR3.5bn higher than expected and an additional EUR2.7bn in other revenues (including dividends from state-owned companies). Furthermore, public spending will be lower than projected this year due to a lower-than-expected take-up of the government’s ‘citizenship income’ and early retirement scheme. The 2019 structural deficit will improve by 0.3pp of GDP (including

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A truce between Rome and Brussels

11 days ago

For now, Italy has avoided Brussels’ Excessive Deficit Procedure. But tensions are set to rise again in the autumn when Italy presents its 2020 budget package.In its mid-year budget revision, the Italian government lowered its 2019 deficit target. The government pointed to better-than-expected revenues for this revision, including tax revenues that were EUR3.5bn higher than expected and an additional EUR2.7bn in other revenues (including dividends from state-owned companies). Furthermore, public spending will be lower than projected this year due to a lower-than-expected take-up of the government’s ‘citizenship income’ and early retirement scheme. The 2019 structural deficit will improve by 0.3pp of GDP (including one-offs), instead of deteriorating by 0.2pp as originally agreed with the

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Swiss monetary policy – it’s (almost) all about the Swiss franc

20 days ago

With the ECB and the Fed both signalling their readiness to provide further stimulus, the Swiss National Bank is unlikely to have smooth sailing over the coming months.
How the Swiss National Bank (SNB) reacts to further stimulus by its US and European counterparts will be the key focus of the coming months for investors. We believe that the Swiss central bank will be reluctant to cut rates in direct response to the ECB, especially in the case of a small 10 basis point deposit rate cut by the latter, as we expect.
The SNB’s first line of defence is more likely to be FX market interventions to counter any appreciation of the CHF. If FX interventions prove ineffective, the SNB would resort to a rate cut. Our

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How dovish can Swiss monetary policy go?

June 11, 2019

The Swiss National Bank finds itself having to deal with an uncertain growth and inflation outlook as well as persistent external risks, but it is unlikely to pre-empt the ECB on interest rates.
At its meeting on 13 June, the Swiss National Bank (SNB) will face an uncertain growth and inflation outlook. Economic data have been mixed and, more importantly, external risks (intensification of trade disputes, Brexit, Italian budget disagreements…) have increased. Since the last SNB meeting in March, the CHF has appreciated by 1.5% against the EUR and by 1.3% against the USD.
In this context, we believe the bank’s policy statement will remain broadly unchanged. The interest on sight deposits at the SNB will remain at

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How dovish can Swiss monetary policy go?

June 11, 2019

The Swiss National Bank finds itself having to deal with an uncertain growth and inflation outlook as well as persistent external risks, but it is unlikely to pre-empt the ECB on interest rates.At its meeting on 13 June, the Swiss National Bank (SNB) will face an uncertain growth and inflation outlook. Economic data have been mixed and, more importantly, external risks (intensification of trade disputes, Brexit, Italian budget disagreements…) have increased. Since the last SNB meeting in March, the CHF has appreciated by 1.5% against the EUR and by 1.3% against the USD.In this context, we believe the bank’s policy statement will remain broadly unchanged. The interest on sight deposits at the SNB will remain at 0.75% and the central bank will reiterate its willingness to intervene in the

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Why has euro inflation stayed so low?

June 6, 2019

Weak inflation data pose a conundrum, both in terms of the growth outlook and the ECB’s policy stance. We believe the ECB will stay on hold in 2020.
The euro area headline flash Harmonised Index of Consumer Prices (HICP) dropped to 1.2% year on year in May from 1.7% the previous month.  Core inflation fell by 50bp to 0.8% y-o-y. While this reflects volatility stemming from the date of Easter this year, one can legitimately ask why inflation remains so low in the euro area, with the underlying inflation trend remaining close to 1.0% y-o-y. This remains a conundrum for the euro area’s outlook and the European Central Bank’s (ECB) next monetary policy moves, especially as several measures show that wage growth started

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Why has euro inflation stayed so low?

June 5, 2019

Weak inflation data pose a conundrum, both in terms of the growth outlook and the ECB’s policy stance. We believe the ECB will stay on hold in 2020.The euro area headline flash Harmonised Index of Consumer Prices (HICP) dropped to 1.2% year on year in May from 1.7% the previous month.  Core inflation fell by 50bp to 0.8% y-o-y. While this reflects volatility stemming from the date of Easter this year, one can legitimately ask why inflation remains so low in the euro area, with the underlying inflation trend remaining close to 1.0% y-o-y. This remains a conundrum for the euro area’s outlook and the European Central Bank’s (ECB) next monetary policy moves, especially as several measures show that wage growth started to pick up last year.  Recent research by the ECB may provide an answer. It

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European elections – a more diverse but still pro-Europe parliament

May 28, 2019

Voter turnout for European parliament elections surged across the continent, exceeding 50% for the first time in a quarter century and breaking the downward trend of the last four decades. However, differences in turnout across the EU have been substantial and a more fragmented parliament has emerged.
Voter turnout was up for the first time ever and at 51%, higher than in any election since 1994. The results delivered a parliament with a pro-European majority, broadly in line with opinion polls.
The traditional centre-right European Popular Party (EPP) and the centre-left Socialist & Democrats (S&D) remained respectively the first and the second groups, but both suffered major losses. Indeed, the “grand coalition”

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European elections – a more diverse but still pro-Europe parliament

May 28, 2019

Voter turnout for European parliament elections surged across the continent, exceeding 50% for the first time in a quarter century and breaking the downward trend of the last four decades. However, differences in turnout across the EU have been substantial and a more fragmented parliament has emerged.Voter turnout was up for the first time ever and at 51%, higher than in any election since 1994. The results delivered a parliament with a pro-European majority, broadly in line with opinion polls.The traditional centre-right European Popular Party (EPP) and the centre-left Socialist & Democrats (S&D) remained respectively the first and the second groups, but both suffered major losses. Indeed, the “grand coalition” of EPP and S&D has lost its traditional absolute majority for the first time

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Rising downside risks to euro area growth

May 23, 2019

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

May 22, 2019

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

May 16, 2019

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

May 10, 2019

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

May 10, 2019

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

April 26, 2019

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 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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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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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 economy down. There is no single explanation for this. Rather, the German

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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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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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