Economic week ahead: Focus on global prospects

The International Monetary Fund (IMF) and World Bank's annual meetings kick-off in Washington on Friday. (AFP)

The International Monetary Fund (IMF) and World Bank's annual meetings kick-off in Washington on Friday. (AFP)

The International Monetary Fund (IMF) and World Bank’s annual meetings kick-off in Washington on Friday. In the run-up to the gatherings, the IMF will release its World Economic Report on Tuesday and Global Financial Stability Report on Wednesday. 

IMF and World Bank chiefs Christine Lagarde and Jim Yong Kim will hold press conferences on Thursday and finance ministers and central bankers from the Group of 20 nations will wrap up a two-day conference on Friday.

Nigeria’s finance minister Ngozi Okonjo-Iweala will speak at the Financial Times’ Africa Summit in London on Monday. Nigeria, the continent’s largest oil producer, overtook South Africa earlier this year to become Africa’s largest economy. 

On Tuesday, the South African Reserve Bank will release September’s statement of reserves.
Treasury will auction R2.35-billion of 2037, 2041 and 2044 bonds. And the South African Chamber of Commerce and Industry (Sacci) will release September’s business confidence index. Sacci’s sentiment gauge, which averaged 94.1 in 2012 and 91.4 in 2013, has hovered around the 90-mark throughout the current year to date.

On Wednesday, Angola and Egypt will update on their reserves and Ghana will report second quarter gross domestic product (GDP) data. The IMF expects Ghana’s growth to decelerate to 4.5% in 2014 from 7.1% in 2013.

On Thursday, Okonjo-Iweala will step back into the spotlight as he, Nigerian President Goodluck Jonathan and trade minister Olusegun Aganga speak at the Made in Nigeria conference in Abuja. 

On the data docket, Thursday will also bring Egypt’s latest consumer inflation figures and South Africa’s August mining and manufacturing figures. On a monthly basis, manufacturing output in South Africa’s fell 3.6% in July. Markets anticipate a smaller 0.5% drop-off for August. 

Closing out the week, Fitch Ratings will release a ratings update for Angola. Fitch left Angola’s “BB-” rating unchanged with a positive outlook in May.  

United States
The US Federal Reserve will release the minutes of the federal open market committee’s September meeting on Wednesday. In their post-meeting statement, policymakers reiterated their pledge to keep interest rates near zero for a “considerable time”. Economists and investors will scrutinize Wednesday’s notes for greater insight into officials’ thinking. 

Beyond these meeting minutes, those looking for clues to the Fed’s future plans will have plenty of material to contemplate this week. Ten senior officials will make public statements over the coming days.

Kansas City Fed president Esther George will deliver remarks on the state of the economy on Monday followed by Minneapolis’ Narayana Kocherlakota and New York’s William Dudley on Tuesday. Chicago Fed chief Charles Evans will speak on Wednesday. St. Louis’ James Bullard, Atlanta’s Jeffrey Lacker and San Francisco’s John Williams will follow on Thursday along with Fed Governor Daniel Tarullo. Soon to retire regional presidents Charles Plosser of Philadelphia and Richard Fisher of Dallas – both vocal critics of the Fed’s loose monetary policies – will close out the week on Friday. 

Beyond the prominent presence of the Fed, this week’s economic calendar is extremely light. The only notable releases scheduled include Tuesday’s August job openings and labor turnover survey report, Thursday’s weekly jobless claims figures and Friday’s federal budget and import and export price reports.  

Germany, Europe’s largest economy, and the United Kingdom – the continent’s number three – will report August industrial production figures on Tuesday. German output likely fell 1.5% from July to August. Britain’s production probably remained flat or rose very slightly over the same period.

On Wednesday, European leaders – including German Chancellor Angela Merkel and French President Francois Hollande – will head to Milan for a growth summit convened by Italian Prime Minister Matteo Renzi. With Europe’s economy still struggling, Hollande and Renzi are widely expected to lobby Merkel for continent-wide fiscal stimulus and an easing of the austerity measures Germany has long championed.

On Thursday, the Bank of England will step into the spotlight. Consensus is that the central bank’s monetary policy committee will keep the UK’s benchmark rate on hold at 0.5%, a record low. 

Also on Thursday, Germany and France will report August trade figures. Germany’s trade surplus likely narrowed to €17.7-billion from €23.4-billion in July. France’s trade deficit may also have narrowed, from €5.5-billion to €5.4-billion. 

On Friday, France and Italy will report August industrial output numbers and the UK will release August trade figures. French output likely fell 0.3%, month on month. Italian production, however, probably grew 0.5% on the same basis. The UK’s trade gap, excluding trade with the European Union, may have narrowed to around £4.0-billion. The country’s world trade balance probably narrowed to £9.6-billion from £10.2-billion previously. 

Three central banks will announce rates decisions on Tuesday. The Bank of Japan, Reserve Bank of Australia and Bank of Indonesia are expected to leave their overnight rates on hold at 0.1%, 2.5% and 7.5%, respectively. 

Tuesday will also bring Japan’s August indices of business conditions. The coincident composite index will probably show a 1.5-point drop. The leading index may have fallen 1.6-points, the first fall in three months.

On Wednesday, Japan’s Cabinet Office will release August machinery orders – a leading indicator of business investment in equipment – and HSBC will release China’s services purchasing managers’ index (PMI). 

Analysts surveyed by Market News International expect Japan’s core private-sector orders – which exclude electric utility and ship demand – to have risen 1.1% on a monthly basis, down from a 3.5% rise in July and 8.8% surge in June. Economists at 4CAST forecast a slide in China’s services PMI to 53.8 from 54.1 previously. Any reading over the 50-mark indicates continued expansion for the sector. 

Attention will stay with China on Friday for three significant economic releases. Aggregate financing data, the broadest measure of credit in the world’s number two economy, likely rose to 1.2-billion yuan in September from 957.4-billion yuan in August. Money supply data, also scheduled for release, will probably show that M2 money supply grew 13.0% from a year earlier in September.

Matt Quigley

Matt Quigley

Matt Quigley writes the weekly economic preview for the Mail & Guardian. His blog on the South African economy can be found at Read more from Matt Quigley

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