BBC News - Eurozone growth hit 10-year high in 2017

The eurozone's economy grew at its fastest pace for a decade in 2017, according to official figures.

The economy of the 19-nation bloc grew by 2.5% last year, according to Eurostat, the strongest growth since the 3% rate seen in 2007.

Eurostat also said that the eurozone grew by 0.6% in the final three months of 2017.

The European Central Bank has been carrying out a huge stimulus programme in an attempt to drive eurozone growth.

That programme has seen the bank slash its main interest rate to zero, and spend billions of euros a month on buying financial assets.

Growth in the eurozone has been picking up and it is now regarded as one of the strongest parts of the global economy.

Analysis by Andrew Walker, BBC World Service economics correspondent:

The growth figure is slightly slower than the previous quarter, but it still suggests the improved recovery of the last couple of years is being sustained.

That improvement is one of the reasons the short term global economic outlook has picked up.

The region has had support from the extremely easy money policy of the Eurozone central bank.

Its main interest rate is zero and another - the rate it pays for overnight deposits by banks - is negative.

And it is still pursuing the policy of buying financial assets known as quantitative easing, though it has cut back the amount it buys each month.

The US Federal Reserve by contrast ended its asset purchases in October 2014 and has raised its main interest rate five times from the low it reached in the aftermath of the financial crisis.

So the Eurozone is looking better, but it's not back to normal.

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In December, the ECB lifted its growth estimates for the eurozone, predicting growth of 2.3% in 2018, up from a previous estimate of 1.8%, while 2019's forecast was increased to 1.9% from 1.7%.

Last week, the International Monetary Fund (IMF) said the prospects for the global economy were improving, as it raised its global growth forecast for this year and next to 3.9%.

The IMF said the recent pick-up had been pretty broad-based, particularly in Europe and Asia.

'Solid' growth

The Eurostat data also showed that the estimate of eurozone growth in the third quarter of last year was revised up to 0.7% from 0.6%.

"The eurozone economy picked up momentum in the second half of last year," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

Mr Vistesen described the 0.6% growth seen in the fourth quarter as "solid", adding it was probably driven by investment and net exports.

Bloomberg News - New Mauritian Central Bank Governor Sees Inflation Contained

By 

Kamlesh Bhuckory

Inflation expectations in Mauritius are contained for now, leaving room for the central bank to stick to its accommodative stance to support economic growth, Governor Yandraduth Googoolye said as he prepares to chair his first Monetary Policy Committee meeting next month.

The pick-up in the average rate of price growth in the 12 months through December was due to temporary supply constraints and the low base of 2016, Googoolye, who began his term as governor on Jan. 15, said in an emailed response to questions. The core inflation rate, which excludes food and mortgage costs, more than doubled in the period from June to December.

“Although core inflation measures increased, we view that they have been broadly stable and contained,” he said. The central bank will focus on reducing the difference between price growth in Mauritius and its major trading partners “and ensure that our policies are geared towards supporting the competitiveness of the Mauritian economy,” he said.

Mauritius’s $14 billion economy is grappling with higher food prices after heavy rains damaged crops, forcing the country to import. The Bank of Mauritius’s Monetary Policy Committee meets Feb. 28 to decide its next move on interest rates after cutting the benchmark gauge by 1.15 percentage points over the past three years to a record low of 3.5 percent.

The most recent cut of 50 basis points was unanimously decided on Sept. 6 to stimulate more investment in the Mauritian economy, the MPC said at the time.

“The accommodative stance taken by the bank so far has helped to support domestic economic activity,” Googoolye said. “Whether we have reached the end of an accommodative cycle is presumptuous at this stage. We should leave it to the MPC to do this assessment.”

Economic growth in the Indian Ocean island nation is expected to accelerate to 4 percent this year from an estimated 3.9 percent last year, Port Louis-based Statistics Mauritius said in December.

Mauritius is the easiest place in Africa to do business, according to the World Bank, while the African Development Bank ranks it as the most competitive economy in sub-Saharan Africa. The sugar- and textile-exporting nation is targeting becoming a high-income country, which is defined as an economy with a gross national income per capita above $12,735, by 2025.

Googoolye, 63, is the third governor of the Bank of Mauritius since the December 2014 elections. He replaced Rameswurlall Basant Roi, whose three-year contract ended earlier this month and wasn’t renewed. Googoolye first joined the bank in 1985 and was promoted to first deputy governor in 2006 under Basant Roi’s first stint as governor.

BBC News - UK economic growth exceeds forecasts, ONS says

The UK economy expanded by a better-than-expected 0.5% in the last three months of 2017, official figures say.

Economists had expected a 0.4% expansion in the three months to December.

However, the Office for National Statistics (ONS) said the broader picture was "slower and more uneven" growth.

In 2017 as a whole, growth was 1.8% compared with 1.9% in 2016 - the slowest since 2012, the ONS said.

The services sector, which accounts for the bulk of the economy, expanded by 0.6% in the fourth quarter - stronger than the 0.4% rise in the three months to September.

"The boost to the economy at the end of the year came from a range of services including recruitment agencies, letting agents and office management," said Darren Morgan, head of GDP at the ONS.

Carney calls for 'deeper relationship' with Europe

Mortgage approvals at five-year low

Yet consumer-facing parts of the services sector, which include distribution, hotels, catering, transport and communications, posted much slower growth, he said.

Manufacturing also grew strongly, but construction contracted by 1% - its third consecutive fall and worst quarterly performance since the third quarter of 2012.

John Hawksworth, chief economist at PwC, said construction appeared to be the sector most affected by Brexit-related uncertainty, deterring commercial property investment and dampening the housing market, particularly in London.

Samuel Tombs at Pantheon Macroeconomics said the "undeniably strong" quarterly figures increased the chance of the Monetary Policy Committee raising interest rates again as soon as this summer.

However, Hargreaves Lansdown senior economist Ben Brettell described growth as anaemic and doubted there would be more than one rate rise this year, "probably in the autumn".

Sterling jumped 0.8% to $1.4253 following the release of the GDP figures.

Analysis: Andy Verity, economics correspondent

Choose your comparator. You might, like Bank of England governor Mark Carney, point out that the economy is about 1% smaller than the Bank predicted it would be before the Brexit vote. But that was in the event of a "stay" vote.

Pro-Brexit critics might point out the economy is doing a lot better than his own warnings about the risk of a "technical recession" if the UK voted to leave.

Annual growth of 1.8% may be less than we would like, but so far there is little sign of the Brexit-induced disaster that some predicted.

Reuters News - Trump warns Davos on unfair trade, says U.S. 'open for business'

DAVOS, Switzerland (Reuters) - U.S. President Donald Trump took his “America First” message to the world’s elite on Friday, telling a summit of business and political leaders that the United States would “no longer turn a blind eye” to what he described as unfair trade practices.

Trump became the first sitting U.S. President to address the annual conclave of the rich and powerful at the Swiss ski resort of Davos for 18 years, closing the summit with a mostly upbeat speech that declared the United States “open for business”.

“Now is the best time to bring your money, your jobs, your businesses to America,” he said, singling out tax cuts and curbs to regulation as boosting the investment climate. “The world is witnessing the resurgence of a strong and prosperous America.”

He said he would always promote “America First”, as he expected other world leaders to do on behalf of their own countries, but added: “America First does not mean America alone. When the United States grows so does the world.”

But he swiftly turned to a theme of demanding tougher enforcement of trade rules, accusing unidentified countries of unfair practices, including stealing intellectual property and providing state aid to industry.

“We will enforce our trade laws and restore integrity to the trading system. Only by insisting on fair and reciprocal trade can we create a system that works not just for the United States but for all nations,” Trump said.

“The United States will no longer turn a blind eye to unfair trade practices,” he said. “We cannot have free and open trade if some countries exploit the system at the expense of others.”

His speech was mostly met by polite applause, although he drew some jeers and whistles during a question and answer session, when he attacked the news media: “It wasn’t until I became a politician that I realized how nasty, how mean, how vicious and how fake the press can be,” he said.

While he has a record of opposing trade agreements involving multiple countries, he said the United States would seek bilateral deals with individual states. That could include members of a Trans-Pacific trade agreement from which he has withdrawn, he said, adding he would consider negotiating with them collectively if it was in the U.S. interest.

Before his trip to Davos, Trump imposed 30 percent tariffs on imported solar panels, among the first unilateral trade restrictions made by the administration as part of a broader protectionist agenda.

MNUCHIN “NOT TRYING TO TALK DOWN DOLLAR”

The Trump administration’s debut at Davos also caused a storm because of comments by Treasury Secretary Steven Mnuchin, who said earlier this week the United States benefited from a lower dollar, which would make its exports cheaper.

Those remarks sent the U.S. currency tumbling and drew sharp rebukes from the European Central Bank chief and other figures, who view countries talking down their own currencies as a violation of unwritten rules to keep trade balanced.

Mnuchin told CNBC television on Friday he was “absolutely not trying to talk down the dollar” and that his remarks had been taken out of context. “What I said was actually very even-handed and consistent with what I said before.”

On Thursday, Trump said he ultimately wanted the dollar to be strong. U.S. officials said there was no disagreement between Trump and Mnuchin, and the Treasury Secretary had been making a factual observation about the impact of a lower dollar, not announcing a policy preference to drive it down.

Despite Trump’s tough trade talk, those in the audience mostly noted the upbeat tone of his speech.

“I think he came here to make not just American but global business comfortable about where America is now,” said IHS Markit’s chief economist, Nariman Behravesh. “He wasn’t trying to convert people to his own views, but saying we are a great economy, come and invest in the U.S.”

Andrei Guryev, chief executive of Russian fertilizer giant Phosagro, said Trump had spoken “how big business people should be speaking at important road shows of their own companies”.

That did not please everyone. Winnie Byanyima, director of Oxfam International, said: “Trump’s boastful sales pitch was a victory lap for the trillions of tax cuts that the wealthy elites and corporations have clamored for.”

Still, the reception was more polite than might have been expected, given the open anxiety with which the prospect of a Trump presidency was met at Davos a year ago.

Trump’s questioning of trade, withdrawal from the Paris climate treaty and nationalist rhetoric sit uneasily at the quintessentially globalist event. Throughout the week, European leaders spoke with worry about the rise of populism.

Without mentioning Trump by name, German Chancellor Angela Merkel evoked the build-up to the two world wars.

Trump hosted a dinner with business leaders on Thursday night. Two European executives told Reuters they stayed away because they did not want to shake his hand. One said he consulted his wife and children before deciding not to go.

Additional reporting by Alessandra Galloni, Dmitry Zhdannikov, Silvia Aloisi and Simon Robinson; Writing by Peter Graff; Editing by Mark Bendeich

Our Standards:The Thomson Reuters Trust Principles.

BBC News - Brexit: US ready for an 'attractive' UK trade deal

by Kamal Ahmed

US Treasury Secretary Steven Mnuchin has reinvigorated talk of a free trade deal with the UK following Brexit.

It follows worries that Britain's "special relationship" with the US had cooled.

Mr Mnuchin said Britain would still be at the "front of the queue" for a bilateral free trade deal following the exit from the European Union.

"As soon as the UK is ready we will be prepared to negotiate an attractive trade deal," he told the BBC in Davos.

I asked Mr Mnuchin if the relationship between the US and Britain had become strained after President Donald Trump cancelled a meeting to come to the UK to open the new US embassy in London.

President Trump also criticised Prime Minister Theresa May on Twitter after clashing over his retweet of Britain First videos.

Mr Mnuchin said that a positive economic future for Britain was very important to the US, and that America was maintaining full support for the UK over "the Brexit issue".

He said the US administration was "monitoring the discussions", adding: "We want to see a successful transition."

Mr Mnuchin met Mark Carney, Governor of the Bank of England, on Wednesday to discuss Brexit, and he will meet Philip Hammond, the chancellor, later on Thursday.

The US Commerce Secretary, Wilbur Ross, said that he had met the British international trade secretary, Dr Liam Fox, to discuss stronger trade relationships.

He said the UK would be following the US model of having "commercial officers" based in every embassy to boost economic and business ties.

Bloomberg News - A Strong Rand Is Ruining the Gold Rally for South African Mines

by Felix Njini

For South African gold miners, it’s both the best and worst of times.

The metal started the year with a bang, rising 4 percent so far and trading near the highest since August 2016. But an equally impressive rally in the rand means that South Africa-focused producers are likely to miss out on the party.

Because mining companies pay most of their expenses in local currency, a stronger rand squeezes profit margins and can render some operations unprofitable. Many of South Africa’s gold mines date back to the 1950s and 1960s and much of the easily accessible metal has been exhausted, while labor-intensive mining methods compound the effect of currency moves.

Read more: Rand Recovery Punishes South Africa’s Aging, Costly Gold Mines

“With the rand below 12 to the dollar, margin pressure is definitely building up,” Carsten Menke, an analyst at Bank Julius Baer & Co., said by phone. “Rand strength is the flip side of an improving economy, but it’s causing headwinds to miners because of costs going up -- they are not enjoying the tailwinds from rising gold prices.”

The rand traded below 12 per dollar on Wednesday for the first time since May 2015, extending a rally sparked by an improving domestic political environment. Sentiment has been buoyed by the election of Cyril Ramaphosa as head of the ruling African National Congress in December, setting him on a path to take over from President Jacob Zuma.

The gold price rally “won’t make a difference in the short term” to South African miners, Menke said. The need to maintain high capital expenditure also thins out profit margins, he said.

More than half of South African gold shafts may be operating at a loss and a stronger currency raises the risk of closures, said Rene Hochreiter, analyst at Noah Capital Markets.

BBC News - EU creditors to start Greece debt-relief talks

Some European creditors have been reluctant to give Greece more debt relief

EU creditors have agreed to start talks on possible debt relief for Greece as the country prepares to leave an eight-year bailout programme.

Greece's public debt totals 180% of its economy and the talks will focus on how to link any relief to economic results.

The International Monetary Fund (IMF) has long been in favour of substantial debt relief but has faced opposition from countries like Germany.

The eurozone has also agreed in principle to pay out new loans.

Why give Greece debt relief?

The IMF says Greece's debt is "unsustainable" and has insisted on substantial relief from European creditors as a condition to join the current and third bailout, which ends in August.

Eurozone countries have provided some debt relief already, in the form of lower interest rates and extended repayment periods, but some have been reluctant to go any further.

Several face domestic political pressure over providing debt relief - it does not go down well to be seen rescuing foreign governments from what are seen as the consequences of their own irresponsibility.

• Reality Check: Have the Greek bailouts worked?
• 
• "I'm hungry": Greece's economic crisis has had a severe impact on the poor
• But meeting in Brussels, the Eurogroup of eurozone finance ministers agreed to start "technical work" on a "growth-adjustment mechanism, as part of the medium-term debt relief measures to be implemented, if needed".
  Such an idea was first proposed by France and would see more relief should Greece's economic growth disappoint in the future, Euclid Tsakalotos, Greece's Finance Minister, was quoted by the Financial Times newspaper as saying.

  What about the current bailout?

  The Eurogroup praised Greece for its recent progress in delivering reforms but said new loans of €6.7bn (£5.9bn; $8.2bn) would only be released once all agreed actions were complete.
  The lenders had asked the country to implement about 100 measures but, so far, only 92 of the steps had been seen through, experts told Reuters news agency.
• 

• Hundreds of people protested in Athens last week against the reforms

The loans would be paid out in two tranches - the first, worth €5.7bn, in February, and the second, the remaining €1bn, in April.

Eurogroup head Mario Centeno said the cash injection was "critical to ensure Greece's full market access".

Mr Tsakalotos welcomed the outcome of the meeting and the start of talks on possible debt-relief measures.

"People are now convinced that things have turned around, and people are beginning to talk about the future and Greece's exit from the programme," he said.

• 
  

Reuters News - Wall Street futures, dollar dip after U.S. government shutdown, Asia resilient

by Hideyuki Sano
TOKYO (Reuters) - Wall Street stock futures and the dollar pulled back slightly on Monday after the U.S. government was forced to shut down amid a dispute between President Donald Trump and Democrats over immigration.

But Asian shares remained resilient overall while U.S. bond yields continue to rise as investors saw limited economic fallout from the standoff in the U.S. capital.

European stock futures are mostly opening slightly higher, with Dax futures up 0.2 percent, and France’s Cac futures up 0.05 percent. Britain’s FTSE futures are down 0.1 percent.

“After all, people know this is just a political show. Neither Republicans nor Democrats can afford to keep dragging their feet for long ahead of mid-term elections this year,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

MSCI’s broadest index of Asia-Pacific shares outside Japan managed to erase slim losses earlier to eke out gains of 0.1 percent, hitting a record high for six days in a row. Japan’s Nikkei also ended up 0.03 point.

U.S. S&P500 mini futures dipped just 0.1 percent, still clinging near a record high hit on Friday.

A U.S. government shutdown will enter its third day on Monday as Senate negotiators failed to reach an agreement late on Sunday to restore federal spending authority and deal with demands from Democrats that young “Dreamers” be protected from deportation.

The Senate set a vote for 12 p.m. (1700 GMT) on Monday on advancing a measure to provide temporary government funding through Feb. 8, end the shutdown and allow hundreds of thousands of federal employees to return to work.

But it was unclear whether there would be enough Democratic votes on Monday to advance a temporary spending bill.

While many see minimal impact on the economy from a short-term government shutdown, analysts say a prolonged stalemate in Washington could dampen investors’ confidence in U.S. assets.

“The markets had not expected this shutdown. Given that U.S. share prices have rallied strongly since the beginning of the year, we have to see if this event is a trigger to change the market trend,” said Takafumi Yamawaki, head of Japan fixed income research at JPMorgan Securities.

Yamawaki noted that during previous government shutdowns - two in 1995 and one in 2013 - U.S. bond yields have tended to slip in the first few weeks after the closure.

But so far U.S. Treasuries yields have risen despite the government shutdown, extending their uptrend since September.

The benchmark 10-year yield rose to as high as 2.672 percent, its highest level in 3-1/2 years. A clear break above its double top marked in December last year and March could signal a further rise in the yield, analysts say.

In the foreign exchange market, the dollar’s index against a basket of major currencies dropped about 0.2 percent from late last week to 90.465, not far from three-year low of 90.104 touched on Wednesday, before edging back to 90.63.

The euro opened the day 0.4 percent higher at $1.2275, but it stopped short of testing Wednesday’s three-year peak of $1.2323 and pared back much of the gains to trade at $1.2225.

The common currency was also helped after Germany’s Social Democrats (SPD) voted on Sunday to begin formal coalition talks with Chancellor Angela Merkel’s conservatives, moving Europe’s economic powerhouse closer to a stable government after months of political deadlock.

The safe-haven Swiss franc gained 0.3 percent to 0.9619 franc per dollar. It hit a four-month high of 0.9536 to the dollar on Friday.

The Japanese yen was little changed at 110.83 yen to the dollar, not far from Wednesday’s four-month high of 110.19.

The South African rand was the biggest mover in Asian trade, rising almost 1 percent at one point to 2-1/2-year highs of 12.0825 per dollar.

Leaders of South Africa’s ruling African National Congress (ANC) met on Saturday to outline the party’s program for the coming year amid reports that its executive planned to force Jacob Zuma to quit as the country’s president.

Moving in the opposite direction, the Turkish lira eased 0.6 percent to 3.8280 after Turkey’s army and rebel allies battled U.S.-backed Kurdish militia in northern Syria, in a campaign that has opened a new front in Syria’s civil war.

Oil prices ticked up, pushed higher by comments from Saudi Arabia that cooperation between oil producers who are currently withholding supplies in an effort to prop up the market would continue beyond 2018.

Brent crude futures were at $68.75, up 0.2 percent, from their last close. Brent on Jan. 15 hit its highest since December, 2014, at $70.37 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $63.53 a barrel, up 0.3 percent from their last settlement. WTI marked a December-2014 peak of $64.89 a barrel on Jan. 16.

Editing by Shri Navaratnam and Sam Holmes

Our Standards:The Thomson Reuters Trust Principles.

BBC News - China's economy grows by 6.9% in 2017

China's economy grew by 6.9% in 2017 according to official data - the first time in seven years the pace of growth has picked up.

The figure beats Beijing's official annual expansion target of about 6.5%.

China is a key driver of the global economy and so the better-than-expected data is likely to cheer investors around the world.

But many China watchers believe the GDP numbers are much weaker than the official figures suggest.

This month alone, the governments of Inner Mongolia and of the large industrial city of Tianjin have admitted their economic numbers for 2016 were overstated.

Taking the figures at face value, the 2017 growth rate is China's highest in two years. And it represents the first time the economy has expanded faster than the previous year since 2010.

• IMF warns over 'large risks' in China
• Human cost of China's economic reforms
• Has Beijing's air quality improved?

However as Beijing ramps up efforts to reduce risky debt and to increase air quality, analysts said this may impact 2018 growth.

The numbers released on Thursday also showed that in the last three months of 2017, the economy grew at an annual rate of 6.8% - slightly higher than analysts had been expecting.

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Analysis

Robin Brant, BBC China Correspondent, Shanghai

Two things stand out.

First, it looks like stronger exports - as the world economy picked up - and the final sputter of (another) government infrastructure investment spurt helped make 2017 better than expected.

But that's the model China is trying - gently - to get away from.

Second, is it true?

China's figures can be so stable, so in line with government targets, that it's hard to really believe them.

In the run up to these figures being published there's also been an unusual spate of honesty from several provincial governments, who've admitted faking their GDP or fiscal figures. All of which fed into the national picture.

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China's debt has risen significantly in recent years, with worrying numbers around local government loans, corporate and household debt and non-performing bank loans.

The International Monetary Fund (IMF) said recently that the country's debt had ballooned and was now equivalent to 234% of the total output. It said Beijing needed to concentrate less on growth and instead help improve banks' finances, among other efforts.

Beijing meanwhile says it has been taking steps to contain risky debt despite the impact that might have on economic growth - efforts the IMF said it recognised.

The government has promised to continue tackling local government debt, among other efforts, and on Thursday vowed to help state-owned enterprises "leverage and cut debt ... and to repay their bonds on time this year".

Blue skies v economic growth

China's strict anti-pollution measures, which were introduced across 28 cities last year, are also expected to hurt economic growth in the short term.

The measures have included shutting down or cutting back production at factories in heavy industry like cement and steel.

Households have also been asked to switch to natural gas and electricity from coal, in an effort to curb pollution.

However this policy left millions without proper heating, and so was temporarily abandoned in December.

Chinese officials have said Beijing's air quality improved sharply in the winter of 2017 and heralded their efforts as a "new reality" for the country.