Brexit: a déjà vu?

Brexit: a déjà vu?

Key takeaway – History has proven that the United Kingdom (UK) is a reluctant European: it systematically questions – but eventually integrates in – the European Union (EU). On June 23, 2016, a referendum will decide whether the UK should remain in the EU. This is not a first: in 1974, just one year after […]

Understanding China’s Rise: The Role of Captive Savings

Understanding China’s Rise: The Role of Captive Savings

photo: Steve Passlow Key takeaway – Over the last three decades, China’s contribution to global growth tripled. The interplay of three domestic factors enabled a growth acceleration: abundant cheap labour flocked into the industrial sector and accepted the financial repression of its savings, which in turn funded massive investment via subsidized lending to state-owned enterprises (SOEs). […]

Turkey: The Banking Sector Needs Profitability-Enhancing Reforms

Turkey: The Banking Sector Needs Profitability-Enhancing Reforms

photo: Jeremy Vandel Key takeaway – Turkey’s economy remains resilient, but low savings hinder growth prospects and weaken the banking sector. Turkish banks – essential for economic growth and job creation – need to raise additional capital by end-2016, but suffer from declining profitability. Meanwhile, macro risks are rising, driven by geopolitical risks, foreign exchange (FX) […]

Despite Political Headwinds, Turkey’s Economy Remains Resilient

Despite Political Headwinds, Turkey’s Economy Remains Resilient

photo: Moyan Brenn Key takeaway – Global and local tensions are taking a toll on Turkey’s political stability. The conflict in Syria, terrorist attacks, the refugee crisis, and President Erdoğan’s divisive efforts to transfer executive powers to the presidency are breeding instability. Over the past year, the investment climate has worsened. Investors’ confidence is diminishing. The […]

Where to Invest in 2016

Where to Invest in 2016

photo: OTA Photos Key takeaway – As predicted, the markets are down and a mild global recession is on its way. Monetary policy remains accommodative, but interest-rate divergence increases volatility. Investors face a difficult environment: most markets remain overvalued and risks are tilted to the downside. After years of complacency, financial stress is rising and market-liquidity […]

Six Questions for Europe

Six Questions for Europe

photo: Images Money Key takeaway – Europe is in decline. To avoid decay, it needs to bridge the gap between aspirations and reality. As practiced, democracy is failing citizens and needs rethinking. Below-replacement fertility rates put the welfare state at risk. Rigid social structures induce risk-aversion and stifle innovation. Immigration-without-integration erodes social cohesion. Without fresh thinking […]

Ten Questions for the Global Economy

Ten Questions for the Global Economy

photo: Nicolas Raymond Key takeaway – The fundamental structure of the world economy is changing. While the contribution of services to global output is on the rise, investment and productivity remain stagnant, savings keep accumulating, and growth and inflation decline. Meanwhile, globalization has increased co-dependence: a rising number of countries can influence the world’s economic performance […]

Qatar in the Global Context – Past and Future Trends

Qatar in the Global Context – Past and Future Trends

photo by: Francisco Anzola Key takeaway – In a challenging global and regional context, Qatar is rising to prominence. The global economy is characterized by weak fundamentals, below-potential growth and low inflation. The regional outlook is hampered by political instability and declining oil prices. By leveraging its resources and location, Qatar is trying to make the […]

Weak Economy, Strong Markets: A Paradox That Might End in Tears

Weak Economy, Strong Markets: A Paradox That Might End in Tears

Key takeaway – The global economy is weak, the markets are strong. As a result, the financial system is reaching an unstable equilibrium. The disconnection between (stock and bond) markets and fundamentals is due to abundant macro-liquidity and repeated central bank (CB) intervention. After years of complacency, data signal risks ahead: across the world, growth […]

US Fed: It Is Not “The When”, It Is How Long It Will Take to Normalize Policy

Key takeaway – On September 16-17, the US Federal Reserve (Fed) will take a difficult decision: to hike rates for the first time in nearly a decade – or wait. It is a close call: US domestic economic conditions could justify tighter policy but remain fragile. While the GDP is growing, inflation is below the […]