e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268;;[{"layout":"linklist","uid":26400,"publicationDate":"17 Oct 13:02","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181412.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGDwUj9cm6_LRa1pIlcRh2E=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181412.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGDwUj9cm6_LRa1pIlcRh2E=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181412.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGDwUj9cm6_LRa1pIlcRh2E=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p><ul class=\"ucrBullets\"><li> On Friday, Germany took a big step closer to forming an unprecedented 3-party coalition, and ' as expected ' it looks like they\u00b4ll pencil over the apparently unresolvable conflict between an obsession with the debt brake and a clear public demand for more investment. This will complicate Germany\u00b4s fiscal policy and muddle the much needed update of the EU\u00b4s fiscal rules.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> The European leadership vacuum on fiscal policy. The ESM\u00b4s Klaus Regling has stepped up his attempt to help get European policymakers to appreciate the obvious need for better fiscal rules ' without saying what exactly he thinks they should be '<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> ... So I\u00b4ll give you my view on that - not that I have any illusion '<\/p><\/li><\/ul>","hash":"e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","synopsislength":"-1","synopsisexpand":"0","nodate":"0","nolinktitle":"0","notitle":"0","dateformat":"d M G:i","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"12"}},{"layout":"linklist","uid":26399,"publicationDate":"15 Oct 16:40","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181411.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGDwUj9cm6_LYhG8rr_y0qw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - US inflation: The temporary and the not so temporary","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> In the US, CPI inflation rose 0.4% mom in September, or 5.4% yoy ' matching the highest 12-month rate since July 2008 ' while core inflation rose 0.2% mom and 4.0% yoy. Amid the great debate on whether elevated inflation is transitory ' we judge it likely is ' September\u00b4s CPI report was somewhere in between, although one month doesn\u00b4t make a trend.<\/li><li> Our chart shows the contributions to monthly CPI inflation from three selected categories: shelter (specifically rent and owners\u00b4 equivalent rent, OER), core goods, and the so-called 'reopening' categories (airfares, hotels and car rental). There are three main takeaways. First, the upward contribution from core goods prices, which soared in April-June as a result of pent-up demand, expenditure-switching and supply-chain bottlenecks, particularly for used cars, is now easing. This is in line with our transitory view, noting that core goods inflation pre-pandemic was typically negative because of globalization and technological progress. While supply-chain disruption and bottlenecks look likely to last well into next year, they aren\u00b4t expected to get any worse and will probably ease sometime next year.<\/li><li> Second, headline inflation would have been 0.1pp higher if it wasn\u00b4t for the drag from 'reopening' categories, reflecting the impact of the Delta variant on travel. As daily new COVID-19 cases are now declining, the downward effect from the 'reopening' category is likely to unwind in coming months, pushing inflation higher, although another wave of the virus would probably delay this. To be sure, this is likely temporary, as the prices of items such as airfares are merely returning to their pre-pandemic levels from well below.<\/li><li> The third takeaway is something that deserves to be watched closely. The price of shelter rose sharply in September, with rents up 0.5% mom, the largest monthly rise since 2001, and owner\u00b4s equivalent rent up 0.4% mom ' the largest rise since 2016. Shelter accounts for a large one-third of the CPI basket, and it tends to be a more enduring force on overall inflation. To be sure, the rising price of shelter is not a big surprise, given surging house prices, progress on employment and the expiration of the federal moratorium on evictions of tenants. Whilst one month doesn\u00b4t make a trend, the strength of the housing market means there will likely be further inflationary pressure from the shelter component in the coming months, before easing back. The Fed is on alert, with the September FOMC minutes stating that, 'many participants pointed out that the owners\u00b4 equivalent rent component of price indexes should be monitored carefully'. In our view, the evolution of shelter costs, along with unit labor costs and, crucially, longer-term measures of inflation expectations, will ultimately decide whether what should be transitory turns out to be longer lasting or not.<\/li><\/ul>"},{"layout":"linklist","uid":26344,"publicationDate":"10 Oct 13:54","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181346.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckplPguW6VVmWU=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181346.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckplPguW6VVmWU=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181346.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckplPguW6VVmWU=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p><ul class=\"ucrBullets\"><li> German politicians took a big step closer to forming a so-called Traffic Light coalition government under Olaf Scholz. While all the important details of the coalition agreement, including on Europe, fiscal policy and investment, still need to be agreed on, the prospect of a new government before Christmas is good news.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> Poland took a big step away from Europe when its constitutional tribunal ruled that part of EU law is not compatible with the Polish constitution. As an immediate consequence, EU funds to Poland will surely be held up, but more importantly, it is a de facto exit road from the EU. A U-turn is needed, but will it come'<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> Ireland and a couple of other small countries signed up to the global minimum 15% corporate tax deal, which is now going ahead between 136 countries. To paraphrase Neil Armstrong when setting foot on the moon in 1969: 'That\u00b4s one giant leap for the country (Ireland), one small step for mankind.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> This coming week\u00b4s IMF meetings: <\/strong> The biggest topics of inflation and the green agenda will be discussed in the middle of a deep institutional crisis.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":26340,"publicationDate":"08 Oct 13:49","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181342.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckpPUQ8PBZYKrs=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Inversion of the EU swap inflation curve looks overdone ","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The recent increase in oil prices, among other factors (e.g. supply bottlenecks, very high shipping costs, the re-opening effect), has triggered an increase in breakeven rates, especially in the eurozone. 2Y EU swap inflation rates are trading at around 2.30%, back at 2011 levels, while 10Y EU swap inflation rates are at around 1.90%, back at 2013 levels. While the close correlation between oil prices and breakeven rates is not a surprise, our Chart of the Week shows that the 2\/10Y spread on the EU swap inflation curve is heavily inverted. In other words, the recent rise in oil prices has affected the short end of the curve more than the long end. <\/li><li> While this is in line with economic theory (unless second-round effects materialize, a rise in commodity prices will affect inflation in the short term but not in the long term), the current inversion of the swap inflation curve looks extreme. One has to go back to 2008 to find a similar inversion of the curve, but back then oil prices spiked to almost USD 150\/bbl (above EUR 90\/bbl at the time) and eurozone inflation peaked at 4.1% yoy. In our view, the current inversion of the curve reflects two factors: first, the very high level of actual inflation; second, that markets perceive the shocks driving this acceleration as transitory.. <\/li><li> In 2008, the 2\/10Y on the swap inflation curve remained inverted for around four months and started re-steepening just before the peak in eurozone inflation was reached. At present the curve has been inverted for almost three months and we see the peak in eurozone inflation in November. We therefore expect to observe a steepening of the curve in the coming weeks. Our view is that this will happen as a consequence of a decline in breakeven rates that is more pronounced at the short end of the curve. The ECB is forecasting inflation at 1.5% in 2023; we expect eurozone inflation to fall to the 1-1.5% range by the end of next year. In this context, 2Y swap inflation close to 2.30% looks overdone. If there is an increase in the inflation-risk premium, we expect it to be temporary and be corrected in the near term (as has happened in the US). Given our view that the current inflation spike is temporary in nature, we assign a low probability to a scenario of re-steepening of the curve due to a further increase in 10Y breakeven rates. <\/li><li> The main risk to our call would come from a further sharp increase in oil and other commodity prices from current levels. This would likely lead to further inversion of the swap inflation curve. <\/li><\/ul>"},{"layout":"linklist","uid":26303,"publicationDate":"05 Oct 14:52","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181299.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZobRbjTvt8zc=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181314.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckpsiMQq36p404=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181311.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAYud3xTRckpCVBJgXFQVug=&T=1&T=1"},"title":"Oil Update - Don\u00b4t count on oil to solve the natural gas crisis","product":"Oil Update","synopsis":"<ul class=\"ucrBullets\"><li> The natural gas crisis is spilling into the oil market, pushing Brent prices above USD 80\/bbl, as the two commodities are linked through a variety of channels. <\/li><li> Oil is only partly the solution to the current global energy crunch because it plays a marginal role in the generation of electricity and the degree to which plants can be converted from gas to oil is limited. <\/li><li> However, oil prices are likely to remain elevated as a result of both the increase in demand to replace gas with oil where possible and by arbitrage opportunities for switching extraction between the two commodities.<\/li><\/ul>"},{"layout":"linklist","uid":26287,"publicationDate":"03 Oct 17:39","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181272.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZsjhCNDnXcZ8=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181272.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZsjhCNDnXcZ8=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181272.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZsjhCNDnXcZ8=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p class=\"ucrIndent\"><p>So, rather than sending you my usual weekend musings, I forward today my team\u00b4s just published new forecasts and outlook as presented in our flagship publications the Chartbook and the CEE Quarterly; links below.<\/p><\/p>"},{"layout":"linklist","uid":26279,"publicationDate":"01 Oct 13:50","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181271.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZTlTvkxSSOWI=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Italian banks\u00b4 NPL ratio falls below the 2008 level, with manageable NPL inflows ahead","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Non-performing loan (NPL) data as of 30 June 2021 show that the gross NPL ratio of Italian banks declined to 5.0% from 5.3% as of end-1Q21. This is the lowest gross NPL ratio of the Italian banking system since the end of 2008 (5.3%), but still above the EU average of around 2.5%. In nominal terms, Italian banks have reduced their NPL stock significantly, from EUR 341bn in 2015 to EUR 96bn. <\/li><li> The impressive reduction was driven by NPL offloading measures by banks supported by Italian government guarantees on senior tranches of NPL securitizations (GACS). More than EUR 90bn of gross NPL reductions were done with the support of GACS and the framework has been extended until mid-2022 with several deals in the pipeline.<\/li><li> In our view, another big driver of the swift asset quality clean-up was the start of the ECB Single Supervisory Mechanism (SSM) in 2014. The ECB SSM improved the institutional setup and made EU bank supervision more independent of politics. The ECB SSM increased regulatory pressure to quickly restore asset quality. <\/li><li> The NPL stock continued to decline even after the COVID-19 outbreak in 2020 and did not increase in 1H21. The two main direct drivers of this resilient picture are loan moratoriums and government guarantee schemes for new bank loans to corporates. Sizeable government support for the real economy also supported the asset quality. <\/li><li> As of September 2021, EUR 69bn of bank loans in Italy are still in moratorium, down by 75% from EUR 280bn in March 2020. Of the EUR 69bn, 80% are related to loans to corporates. Moratoriums on loans in Italy were extended until the end of 2021. As of 31 March 2021, 34.4% of loans in moratorium are classified as stage 2 and 2.2% as stage 3 and there is asset quality pressure ahead for 2022, when moratoriums will phased out.<\/li><li> Assuming 30% of loans in moratorium will eventually migrate into the NPL stock, this would lead to a manageable NPL stock increase of around EUR 21bn. This would increase the NPL ratio by 1.2pp, from 5.0% to 6.2%, still below the level at the end of 2019 (7.2%).<\/li><li> One has to consider the increasing stock of corporate loans in Italy under public guarantee scheme. The volume of guaranteed loans increased to EUR 100bn as of 31 March 2021 (more than 13% of all outstanding Italian corporate bank loans). Adverse selection is at play here and the average credit quality of the borrowers using public guarantees is weaker than average. But the guarantees are long-term with 72% of the volume having a residual maturity above 5 years and 24% of 2-5 years. This is more a medium-term driver for NPL increases, however.<\/li><li> In a nutshell, the Italian banking sector achieved massive NPL stock offloading in recent years. While NPL offloading is still in the pipeline in 2H21, we see a reversal of the trend from 2022, with moderate, but manageable, NPL increases. <\/li><\/ul>"},{"layout":"linklist","uid":26246,"publicationDate":"28 Sep 17:37","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181231.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZU6taDmKjrKk=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks head for exit (4Q21)","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> Growth has peaked, and we are fine-tuning our global GDP growth forecast for this year, to 5.8% from 6%, and for next year, to 4.6% from 4.7%. The spread of the Delta variant has weighed on demand over the summer, while shortages of materials and labor continue to constrain supply and will probably last into 2022. Growth is likely to remain robust next year, thanks to accumulated household savings, inventory restocking, and the declining economic effects of each new wave of COVID-19. However, growth rates will naturally ease as pent-up demand, fiscal support and spare capacity fade. Inflation will likely remain high through year-end before moderating as base effects turn negative and supply starts to adjust. Central banks will continue to chart a gradual exit from emergency measures.<\/li><li><strong> US: <\/strong> We now expect GDP growth of 5.8% this year (from 6.1%) while our forecast for next year is 3.9% (from 3.8%). This is the result of a downward revision to growth in 3Q21 and slightly stronger growth early next year. GDP is likely to reach its pre-pandemic trend line in 1Q22, a quarter later than previously expected. Inflation is close to peaking but will likely remain elevated well into next year as supply disruption looks set to last longer than anticipated. We continue to see inflation falling back towards 2% by end-2022. The Fed will likely start tapering its QE in November and cease net purchases around mid-2022. We expect the first rate hike in early 2023, followed by a second hike in 2H23.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 5% this year and by 4.3% in 2022. Activity is set to increase strongly again in 3Q21, followed by slower growth at the turn of the year as the reopening boost fades and manufacturing output slows. GDP will probably recover to its pre-pandemic level by year-end. Prospects for 2022 remain positive, supported by deployment of NGEU funds, but activity is unlikely to return to its pre-crisis trend before 2023. Inflation will probably peak in November at close to 4%, before falling sharply over the course of next year. The ECB seems keen to close the PEPP in March. If so, maintaining easy financing conditions and a smooth transmission of monetary policy would require stepping up the pace of the APP and increasing its flexibility.<\/li><li><strong> CEE: <\/strong> We expect economies in EU-CEE and in the Western Balkans to grow by around 6% in 2021 and 4.6% in 2022. Turkey\u00b4s economy could expand by 9.7% in 2021 and 5.5% in 2022. In Russia, GDP growth could slow from 4% in 2021 to 2.4% in 2022. In 2021, the recovery has been driven by pent-up consumer demand\u00a0and exports. In 2022, investment could contribute more to growth, helped in EU-CEE by NGEU disbursements, in Russia by spending from the National Wealth Fund and in Turkey by easier financial conditions. Supply-chain bottlenecks, rising energy prices and buoyant consumer demand could keep inflation outside target ranges for longer than central banks currently expect. Further monetary tightening is needed to ensure price stability.<\/li><li><strong> UK: <\/strong> We are lowering our GDP growth forecasts to 6.4% for this year (from 6.7%) and 5.9% next year (from 6.1%), delaying the time when we expect GDP to surpass its pre-pandemic level by one quarter to 2Q22. Inflation is set to rise to almost 4% in 4Q21 and remain there through 2Q22, before falling back to close to 2% by end-2022. The MPC seems prepared to raise rates as soon as February, but we expect lower growth and higher unemployment to delay a hike until late 2022\/early 2023.<\/li><li><strong> China: <\/strong> We are reducing our GDP growth forecast for 2021 to 8.2% from 8.5%, and for 2022 to 5.0% from 5.7%. The summer turned out to be challenging due to a mix of natural disasters and the spread of the Delta variant. Looking beyond 3Q21, there are several headwinds that might dent the economic outlook, from abrupt state interventionism to rising vulnerabilities in the real estate sector and an economically-damaging 'zero tolerance' approach to COVID-19. Fiscal and monetary policy are likely to remain accommodative. <\/li><\/ul>"},{"layout":"linklist","uid":26247,"publicationDate":"28 Sep 17:17","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2021_181230.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoJRIvbGu4hUoKSAHz3HkdWA==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Time for policy normalization (4Q21)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect economies in EU-CEE and in the Western Balkans, to grow by around 6% in 2021 and 4.6% in 2022. Turkey\u00b4s economy could grow by 9.7% in 2021 and 5.5% in 2022. In Russia, GDP growth could slow from 4% in 2021 to 2.4% in 2022. <\/li><li> Before the end of 2022, output gaps could turn positive in Hungary, Poland, Romania, Russia, Serbia, Slovenia and Turkey. <\/li><li> Pent-up demand is driving the recovery in 2021, helped by savings accumulated in 2020, and rising wages and employment. Exports are contributing to growth owing to strong demand for cars, a bumper harvest, returning foreign tourists and, in Turkey, to competitive gains amid currency depreciation. <\/li><li> In 2022, investment could contribute more to growth, helped in EU-CEE by disbursements from the EU\u00b4s Recovery and Resilience Facility (RRF), in Russia by spending from National Wealth Fund and in Turkey by looser financial conditions.<\/li><li> Public policies are a risk to medium-term growth due to populist spending triggering a limited fiscal adjustment, a backlash against green energy, poor implementation of structural reforms and nationalist agendas affecting economic goals.<\/li><li> Supply-chain bottlenecks, rising energy prices and buoyant consumer demand could keep inflation outside target ranges for longer than central banks currently expect. Further monetary tightening is needed to ensure price stability.<\/li><li> Due to structurally tight labor-market conditions, we expect inflation in EU-CEE to diverge from that in the eurozone in the coming years, forcing EU-CEE central banks to tighten further. The CBR might need to keep the real interest rate positive due to structural rigidities. The CBRT gave up its inflation mandate, with potential consequences on financial stability.<\/li><\/ul>"},{"layout":"linklist","uid":26225,"publicationDate":"26 Sep 13:40","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181205.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZkA4rYLSOxDo=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181205.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZkA4rYLSOxDo=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181205.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZkA4rYLSOxDo=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p><ul class=\"ucrBullets\"><li> What\u00b4s behind China\u00b4s woes, and the likely policy response.<\/li><li>Where contagion is likely to show up.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":26174,"publicationDate":"19 Sep 12:46","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181142.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPaG4-M9sZL7rRG5092p5Vc=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181142.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPaG4-M9sZL7rRG5092p5Vc=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181142.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPaG4-M9sZL7rRG5092p5Vc=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p><ul class=\"ucrBullets\"><li> The election practicalities and what it\u00b4ll take to change the constitutional debt brake.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> The latest polls and what they tell us about the next government coalition.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> What it\u00b4ll mean for key policies.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> I\u00b4ll summarize what I see as Angela Merkel\u00b4s legacy, highlighting where the next government will remain in her footsteps and where it\u00b4ll likely deviate.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":26173,"publicationDate":"17 Sep 16:49","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181141.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPaG4-M9sZL7KHUqBs3IQBA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Soaring wholesale electricity prices heat up debate on cost of green transition","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Eurozone wholesale market electricity prices have hit an all-time high this week. This is primarily due to the steady increase in the price of natural gas (used by power plants for electricity generation) amid persistent supply shortages and bottlenecks in alternative renewable energies. It also reflects, albeit to a lesser extent (EU Timmermans said by 20%), the rise in the price of greenhouse gas emission allowances related to Europe\u00b4s greater ambition for emission-reduction targets (by 55% compared to 1990 levels by 2030 from 40% previously). The latter has contributed to an increase in the cost of electricity generation for those plants using (more polluting) fossil-fuel technologies whose production is still needed to meet electricity demand. <\/li><li> Eventually, the increase in retail electricity prices is probably accounted for to only a small extent by the rising price of gas emission allowances via the pass-through of changes in wholesale electricity prices to retail ones (which, in turn, varies depending on each country\u00b4s price-setting mechanism). Still, the recent increase in wholesale electricity prices has sparked a heated debate across Europe about the cost that consumers will have to bear to support the green transition and how to avoid a backlash. It has also raised fears of a repeat of the yellow-vest protests that raged in France at the end of 2018, albeit they were not primarily about climate action. <\/li><li> The transition to a greener economy will inevitably imply an economic cost of adjustment. This is also the main reason why a shift in climate policies towards less-polluting energy sources has been postponed for so long. The main challenge for policymakers is to ensure that the cost of the adjustment is fairly redistributed and that the most vulnerable groups do not bear an excessive burden, which is a condition to make sacrifices more acceptable. In the face of the recent sharp rise in electricity prices, using part of the revenue derived from the emission trading system to help protect the purchasing power of low-income households represents an appropriate policy. The budgetary cost of these mitigation measures could eventually turn out to be relatively contained if inefficient government-sponsored bans and subsidies, which often concur in the formation of retail electricity prices, were financed in a more appropriate and visible way. This is also a proposal currently being debated in Italy.<\/li><\/ul>"}]

fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128;;[{"layout":"linklist","uid":26247,"publicationDate":"28 Sep 17:17","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2021_181230.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoJRIvbGu4hUoKSAHz3HkdWA==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Time for policy normalization (4Q21)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect economies in EU-CEE and in the Western Balkans, to grow by around 6% in 2021 and 4.6% in 2022. Turkey\u00b4s economy could grow by 9.7% in 2021 and 5.5% in 2022. In Russia, GDP growth could slow from 4% in 2021 to 2.4% in 2022. <\/li><li> Before the end of 2022, output gaps could turn positive in Hungary, Poland, Romania, Russia, Serbia, Slovenia and Turkey. <\/li><li> Pent-up demand is driving the recovery in 2021, helped by savings accumulated in 2020, and rising wages and employment. Exports are contributing to growth owing to strong demand for cars, a bumper harvest, returning foreign tourists and, in Turkey, to competitive gains amid currency depreciation. <\/li><li> In 2022, investment could contribute more to growth, helped in EU-CEE by disbursements from the EU\u00b4s Recovery and Resilience Facility (RRF), in Russia by spending from National Wealth Fund and in Turkey by looser financial conditions.<\/li><li> Public policies are a risk to medium-term growth due to populist spending triggering a limited fiscal adjustment, a backlash against green energy, poor implementation of structural reforms and nationalist agendas affecting economic goals.<\/li><li> Supply-chain bottlenecks, rising energy prices and buoyant consumer demand could keep inflation outside target ranges for longer than central banks currently expect. Further monetary tightening is needed to ensure price stability.<\/li><li> Due to structurally tight labor-market conditions, we expect inflation in EU-CEE to diverge from that in the eurozone in the coming years, forcing EU-CEE central banks to tighten further. The CBR might need to keep the real interest rate positive due to structural rigidities. The CBRT gave up its inflation mandate, with potential consequences on financial stability.<\/li><\/ul>","hash":"fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]