MGI Weekly round-up | 5th May 2017
Stories MGI has been tracking this week:
● “White smoke” as Greece and EU cut deal
● Egypt ready to receive first shipment of Iraq oil
● Merkel values an open door with Turkey
“White smoke” as Greece and EU cut deal
Finance minister Euclid Tsakalotos invoked a term from the practice of electing a new pope to announce that Greece and EU lenders have reached a staff-level agreement to release the next round of bailout funding.
Fiscal measures promised by the Greek government include pension reform, cracking down on tax breaks, and further privitisation sales. Greece hopes to legislate the new measures before the next Eurogroup meeting so that disbursement of funds will be on track to see the country through a debt repayment crunch this summer. The coalition government’s majority is expected to support the measures.
The final loan program is also expected to involve participation of the IMF. The IMF, for its part, is waiting for more details on how Greece will bring public debt to a sustainable path before its board will commit to participation.
Discussion about relief from previous loans has yet to occur, but the Greek government hopes to achieve success on that front later this month. At least some EU officials have hinted that the Eurogroup could be open to the idea.
What are the implications for Medwatchers? The announced reforms hold opportunities for investors: among the new measures, Greece has promised to open up the energy market to competition and plans to sell 40% of the capacity of public coal plants and mines. The agreement has also caused a sharp boost to Greek markets this week: 10-year bond yields (representing perceived long-run risk) dropped to their lowest level since 2014, at just over 6%, and the stock market—particularly bank stocks—saw significant gains as of this newsletter’s publication.
Egypt to receive first shipment of Iraq oil
An oil tanker in Iraq has begun to load 2 million barrels of crude oil bound for Egypt, commencing a one-year agreement reached between the Egyptian Petroleum Authority and the Iraqi Petroleum Company in April.
The deal was announced last month, as Egypt sought alternative oil imports after Saudi Arabia suspended shipments to Egypt in late 2016. Egypt’s minister of petroleum and mineral resources Tarek El-Molla described the deal as a good first step towards further cooperation with Iraq.
Merkel values an open door with Turkey
German Chancellor Angela Merkel said on Wednesday that Europe should not shut the door on Turkey, despite President Tayyip Erdogan's recent scuffles with Europe and the April 16th referendum result that will increase his powers, running afoul of the democratic requirements of future EU membership. Merkel pointed to the important role that a good relationship with Turkey plays in the fight against terrorism, amongst other reasons.
Elsewhere, Turkey’s economy minister Nihat Zeybekci made comments to NTV, a Turkish nationwide television news channel, stating that EU membership is only the government’s secondary goal, with achievement of the EU’s entrance standards desirable on their own merit.
Featured content from the MGI.online data and analysis portal
MGI.online users may assess the implications of Turkey’s future ascension to the EU using our online trade statistics visualizer. Users can select individual countries to view the value of trade between both Mediterranean and non-Mediterranean partners. Turkey’s largest trading partner is Germany. Entry to the EU has the potential to build from this $14 billion market.
The week in data
Here are the highlights from data releases tracked by MGI.online this week:
● Consumer prices in Turkey rose 11.9% year over year in April, following an 11.3% rise in March. The increase is the highest since October 2008 http://bit.ly/2pH8NLE
● March job numbers were flat in Italy, with 22.9 million persons employed; however, more Italians were searching for work, as unemployment rose 1.4% http://bit.ly/2qtzxgG
● In France, business managers in manufacturing revised their investment forecasts for 2017 upward to 6% in April’s survey http://bit.ly/2p8HHta
● Registered unemployed in Spain decreased by 129.0 thousand or 3.5% to 3.6 million in April 2017 from March http://bit.ly/2qupeMd
This week will see the release of industrial production statistics for many of the Mediterranean’s major economies, and Greece will publish several important data points on inflation and unemployment in the wake of its bailout deal.
Monday May 8th, 2017:
● Greece balance of trade for March
● Israel budget balance for April
● Palestinian Territories employment for first quarter of 2017
Tuesday May 9th, 2017:
● France budget balance for March
● Turkey industrial production and retail sales for March
● Italy retail sales for March
Wednesday May 10th, 2017:
● France industrial production and balance of trade for March
● Italy industrial production for March
● Greece inflation for April and industrial production for March
Thursday May 11th, 2017:
● Employment for Greece for February
Friday May 12th, 2017:
● France non-farm payroll employment for first quarter of 2017
Spain CPI inflation for April