Monthly Archives: October 2013

So, the International Monetary Fund is upbeat on the growth outlook for Sub-Saharan Africa. But its biannual outlook for the region flags some big bumps on the way – not least that it is increasingly vulnerable to external shocks. Here are five key points from the paper.

1 – “Africa rising” is on track
The region will account for 2.63 per cent of the global economy in 2014 (measured by purchasing power parity). While that might not sound like much, it will be the largest share it has taken for more than three decades. However, the region’s population accounts for 13 per cent of the global total, underscoring just how far there is to go. Read more

This morning the Bank of England published its monthly Bankstats. These are a treasure trove of information with the headline data showing mortgage approvals at their highest rate since 2008. But the BoE release contains much more information than that, which is summarised in the following four charts. These are better than the charts the BoE publish in their press releases as they show a much longer time series and attempt to put the figures into context.

1. Mortgage approvals Read more

The Office for National Statistics reported today that the economy grew 0.8 per cent in the third quarter of the year. Here are six charts which explain the importance of the data

1. Growth is back at normal levels Read more

Mark Carney, the Governor of the Bank of England, announced a dramatic easing of the central bank’s attitude towards financial companies with temporary funding difficulties, he buried the policies of Lord King, his predecessor, and adopting a stance much more similar to the Federal Reserve and European Central Bank.


Reaction from our economics team:

It might appear unsurprising that a global citizen such as Mark Carney tonight proved such a champion of globalisation. However, this misses the fact that since the crisis a debate has raged between central bankers on the merits of the internationalisation of finance.

Since the crisis global capital flows have collapsed. During it, the risks associated with cross border contagion were all too obvious. The UK has a banking system far more reliant on foreign branches based here than either the US or the eurozone. In recent years, their support to businesses here has waned spectacularly.

Still, Mr Carney was clear that he believed international capital was more blessing than burden. He said he was still keen for London to maintain its status as a global financial centre. Read more

The rate of unemployment was published to day and sits at 7.7 per cent in the three month period between June and August. It is the last set of figures to be published before the next Bank of England inflation report as the next monthly publication date coincides with that report on 13 November. What better time, then, to compare the BoE’s all-important August inflation report forecast with the published official figures.

In the August forecast, the BoE mean prediction for Q3 unemployment rate was 7.9 per cent, with a standard deviation of 0.1 percentage point around the mean. In English: after adjusting for risks, the Bank thought unemployment was not likely to be more than 0.1 percentage point away from 7.9 per cent and almost certainly not 7.7 per cent*. In lay terms, the forecast below was a stinker.

I am not concerned at all that the BoE produces a horrible forecast. That’s life. It has no bearing on the BoE’s credibility. What matters is the way the central bank will respond. There are two broad sorts of responses it can choose. Read more

The Office for National Statistics reports today that the house price index “surpassed its previous peak” in July by 0.3 per cent. Boom, boom, bubble, bubble Britain appears to be the right description.

Yet Sir Jon Cunliffe, the incoming deputy governor for financial stability of the Bank of England said yesterday that the housing market was “patchy” and he dismissed bubble fears.

Sir Jon is far from stupid, so why does he see the market differently to Britain’s national statisticians? Read more

If you look at one chart in the October 2013 World Economic Outlook, make it chart 1.13. For successive IMF forecasts, the chart shows how far output is below the pre-2008 trend. This sort of “hedgehog chart”, so called because the spikes from incorrect forecasts can resemble the creature, demonstrates how thinking has changed in the fund since the crisis started.

A number of things stand out.

1. For most areas, the red line, representing the forecast produced in April 2009 at the worst moment in the crisis initially proved too pessimistic. The world did better than feared.

2. Sadly, most areas are no longer beating the April 2009 forecast. Output in the world economy is now below that forecast for 2013 for the globe, the US, the eurozone and Japan. In developing Asian economies, output is now projected to fall below the 2009 forecast next year. April 2009 still appears too pessimistic only for Latin America, a region many think has been disappointing of late. Read more

By Eswar Prasad, Karim Foda, and Arnav Sahu

The latest update of the Brookings-FT Tiger index shows that the global economic recovery is back on track, although it remains slow and unsteady. The recovery is being borne along by surging business and consumer confidence in advanced economies, and stabilisation in the growth of emerging markets. However, it may be premature for policymakers to declare victory as the recovery is still tenuous and just a shock or two away from turning into another slump.

Advanced economies seem to have put the worst behind them. The US economy continues to push forward at a modest pace and the UK is experiencing surprisingly good growth, while the core eurozone economies and Japan are also turning in positive growth. Across the board, private sector confidence has improved in these economies and inflation remains subdued. However, labour market performance continues to be weak and financial conditions are still mixed. The postponement of the US Federal Reserve’s tapering of its quantitative easing policies sparked a rally in equity markets but credit growth has not picked up in most advanced economies, still acting as a drag on the recovery. Read more

Forget triggers, thresholds, knockouts and long lists of conditions, Paul Fisher, the Bank of England’s head of markets, says everyone is wrong to think forward guidance is complicated. The policy was summarised in a single simple sentence of the BoE’s explanatory document, he said in a speech today.

This is the sentence: Read more

Emily Cadman

Mario Draghi

By Emily Cadman and Claire Jones

Hello and welcome to the FT’s live blog on Mario Draghi European Central Bank’s press conference.

Earlier the ECB kept its main refinancing rate on hold at 0.50 per cent as it tries to support the eurozone’s fledgling recovery. Mr Draghi will discuss the rate decision at a press conference in Paris at 1:30pm BST, when he is also expected to address the central bank’s stance on providing more liquidity to commercial banks as the maturity of two previous sets of cheap loans looms.