Economic week ahead: SA inflation and Ukraine tensions
Economists and investors will continue to keep a nervous eye on Ukraine this week following Sunday's vote by Crimeans to join the Russian Federation, an event sure to escalate tensions between Russia and the West.
Also this week, South Africa will release last month's inflation and retail sales figures, the US Federal Reserve will hold a two-day policy meeting and UK chancellor George Osborne will present his latest budget. Here is your guide.
Statistics South Africa (Stats SA) will release February's consumer price index (CPI) readings on Wednesday. The country's annual inflation rate accelerated for the fourth consecutive month in January to 5.8% – just below the upper-end of the South African Reserve Bank's 3% to 6% target band – but probably remained unchanged last month.
Also on Wednesday, Stats SA will report January's retail sales figures. Analysts expect the release to show that sales rose 4.9% from a year earlier in the first month of 2014, an improvement on December's 3.5% year on year rise.
Stats SA will report January's civil cases for debt, wholesale and motor trade figures along with building stats on Thursday. Friday will bring the fourth quarter credit bureau monitor from the National Consumer Regulator and February's Spark ATM Cash Index.
Elsewhere on the continent, Nigeria – Africa's largest oil producer – will release February's consumer inflation readings on Monday. Producer price figures will follow from Ghana on Wednesday. And Morocco's February CPI will be released on Friday. Zimbabwe may also report February's CPI sometime over the coming days.
Beyond these price reports, economists and investors will also be on the lookout for Kenya's fourth quarter gross domestic product figures and an interest rates decision in Morocco this week.
The Federal Reserve's policy setting arm – the Federal Open Markets Committee – will begin a two-day gathering on Tuesday. This week's meeting is the first with Janet Yellen – Ben Bernanke's successor – as chair. No major policy announcements are expected, but some analysts are hoping that the central bank may provide greater clarity on future plans in the committee's post-meeting statement or chair's press conference.
Officials are widely expected to leave rates on hold at current levels until around the middle of next year. Consensus is that policymakers will also continue to gradually scale back the size of the Fed's asset purchase programme on Wednesday. Analysts expect the Fed to reduce monthly securities buying by another $10-billion to $55-billion.
Beyond the Fed, economists and investors will be on the lookout for a few closely-followed data releases over the coming days. Most notably, January's industrial production figures will be released on Monday. Last month's CPI and housing stats will follow on Tuesday.
Later in the week, attention will shift to the Federal Reserve Bank of Philadelphia's closely-followed regional manufacturing gauge and February's existing home sales data on Thursday.
Tuesday's housing figures are expected to show that the pace of new home construction rose to a seasonally adjusted annualised rate of 910 000 units in February from 880 000 units in January. Permits for new construction likely rose as well. Consensus is that Thursday's existing homes sales data will show that sales slowed further, albeit only slightly, in February as limited supply, rising prices and mortgage rates continued to take their toll.
Markets will continue to monitor developments in Ukraine this week after residents of the Crimea region of the country voted on Sunday to secede from Ukraine and join the Russian Federation following its recent invasion.
Russia recently used its veto power as a permanent member of the UN Security Council to block a resolution calling the referendum illegitimate and illegal and calling on states not to recognise its results. But the United States and European Union have continued to make it clear that the vote will not be recognised.
The United States has already imposed sanction on some Ukrainian separatists and Russian officials and European Union officials, at a meeting on Monday, are widely expected to extend sanctions against Russia, including asset freezes and travel bans against certain officials. The Russian Parliament, for its part, is scheduled to debate a proposal for Crimea to join Russia on Friday.
Beyond events in Ukraine, economists and investors will be scrutinising a few key data releases scheduled over the coming days, including Europe's final February inflation figures on Tuesday. Expectations are that February's inflation rate may be revised downward to 0.7%, year on year, largely as a result of low energy prices. Germany's closely followed Zentrum für Europäische Wirtschaftsforschung economic sentiment indices will also be released on Tuesday.
On Wednesday, George Osborne – the UK's Chancellor of the Exchequer – will present government's budget for the 2014/15 fiscal year alongside the Office for Budget Responsibility's biannual economic and fiscal outlook. Few are expecting major policy changes, but will be paying close attention to revised growth and fiscal forecasts.
Japan's latest trade figures are the big item on an otherwise sparse Asian data diary this week. Japan's ministry of finance will release last month's trade tallies on Thursday.
Economists surveyed by Market News International expect the figures to show that the world's number three economy posted a 20th consecutive monthly deficit in February, but that the gap narrowed significantly from January's record deficit of ¥2.79-trillion. Japan's large trade deficit contributed to lower than expected economic expansion of just 1% in the fourth quarter of 2013.
Officials at the Bank of Japan – the country's central bank – have called January's figure anomalous. A combination of temporary factors – such as North America's harsh weather, the Chinese Spring Festival and strong domestic demand in advance of an impending sales tax hike scheduled for April – all combined to suppress export volumes. An uptick in overseas demand for automobiles and plastics, in particular, probably drove overall export volumes upwards last month.
The median forecast is that Japan's exports rose 12.6% from a year earlier in February – up from a hugely disappointing 9.5% year-on-year rise in January – and that import volumes rose 7.5% – down from a 25.1% rise in January – shrinking last month's trade gap to ¥600.9-billion. If the consensus proves accurate, this would be the country's smallest trade deficit since June of last year.