MGI Weekly round-up | July 14th 2017 

Stories MGI has been tracking this week: 

  • Inflation in Egypt expected to climb even higher
  • France continues push to attract London banks
  • Is Israel’s housing market cooling off?

And as always, we feature content from the MGI data and analysis platform, a summary of the week’s key statistical releases, and a look to the week ahead in data. In this edition, we use MGI’s platform to take a closer look at Egypt’s soaring inflation.

Inflation in Egypt expected to climb even higher
Egypt’s worryingly high inflation rose again in June, and is expected to soar even higher after the government moved to increase electricity and fuel prices last week. The data and outlooks is likely to further punish the Egyptian Pound, which has already lost 50% of its value since the government allowed it to float freely last November as part of reforms to access IMF funding. 

According to data released by the National Statistical Agency of Egypt, the annual inflation rate increased only slightly from 29.7% in May to 29.8% in June. But core inflation (adjusted to remove the impact of highly volatile components) increased more substantially, from 30.6% to 31.2%.
 
Faced with the prospect of hyperinflation, the Central Bank of Egypt has recently employed their policy rate to put the brakes on (last week the bank increased the interest rate by 200 basis points). It remains to be seen if this will have any measure of success.
 
France continues push to attract London banks 
French Prime Minister Edouard Philippe presented plans this week for a suite of reforms aimed at attracting London banks to Paris after Brexit. The measures include eliminating payroll tax brackets imposed on VAT-exempt firms and cancelling a planned extension of tax on share trading. The French government hopes to compete against other European hopefuls such as Frankfurt, Amsterdam, and Dublin, all rushing to take advantage of the great London exodus that many analysts see as imminent.
 
The measures will have the effect of reducing employee costs in the financial sector and ensuring that the financial institution would not face harder regulation than in other European countries. The government will also ensure that bankers’ bonuses are no longer taken into account when labor courts decide on unfair dismissal compensation and may review and change the way EU financial regulations are transposed into French law.
 
The Prime Minister backed up his plan with a speech delivered to financial executives on Tuesday, where he announced that Paris “will become Europe's new number one financial hub after Brexit". Bankers have welcomed the reforms, but remain suspicious as to whether they will remain in place over the long run.  
 
Is Israel’s housing market cooling off?
After a decade of rising house prices in Israel, there are signs that the trend may be reversing. This is good news for the government, which has placed dealing with high housing prices on its policy agenda.
 
According to data released for April and May 2017, the number of house sold fell by 7% against the same period last year. April saw sales of 6,500 homes (both newly constructed and existing) while May saw 8,500. Perhaps more significantly, the percentage of houses bought for investment purposes in April and May dropped from to 16% from 19% last year. These numbers show a slackening in demand that could put a stop to rising prices.
 
The Israeli government is currently introducing measures to deal with prices, targeting investment transactions in particular (with action such as a new tax on owners of three or more apartments). Housing prices have been a hot political issue since 2011, frequently kicking off rounds of protests. 

Featured content from the MGI.online data and analysis portal
Egypt’s inflation history can be retrieved using the MGI platform (https://www.mgi.online/natstats-key-indicators/) by filtering by ‘Egypt’ and ‘Inflation Rate (CPI based)’. You can see the recent skyrocketing inflation in the visualization following the November 2016 float below. Although the last two months have tapered, it remains over 29%. 

The week in data
Highlights from national statistics releases tracked by MGI this week include:  

  • Albania’s CPI grew 2.2% in June, following an increase of 2% in May and 2% in April http://bit.ly/2uZtAdU
  • Croatia’s unemployment rate for the 1st quarter of 2017 increased to 14.1% from 13.4% and 10.9% of the two previous quarters
  • Egypt’s Consumer Price inflation was 29.8% in June. It has not fallen below 28% at any point in 2017
  • Inflation in Greece stood at 1% in June, down from 1.2% in May http://bit.ly/2taFeoJ
  • Survey of consumer confidence in Israel shows pessimism again, scoring -9.3 in June (previously -10.8 in May) http://bit.ly/2sXd7oU
  • Spain's Industrial New Orders Received index grew 0.5% in May 2017 versus April (INE) http://bit.ly/2tSUmV0
  • Consumer prices in Spain increased by 1.5% in June compared to the same period last year http://bit.ly/2tj5p7V
  • CPI Inflation in France slowed to 0.7% in June from 0.8% in May http://bit.ly/2unfQfU

Looking ahead
It’s a busy week ahead, with many key indicators to be released for inflation and unemployment. MGI’s complete data release schedule can be viewed at https://www.mgi.online/release-calendar/. Highlights of next week’s releases include:
 
Monday 17 July, 2017:

  • France 3-month, 6-month and 12-month BTF Auction
  • Turkey unemployment rate for April
  • Croatia CPI for June
  • Slovenia IPI for May

Tuesday 18 July, 2017:

  • Spain 3-month Letras Auction
  • Slovenia employment (register data) for May

Wednesday 19 July, 2017:

  • Israel Inflation expectations for July 

Thursday 20 July, 2017:

  • Turkey consumer confidence for July
  • France 3-Year BTAN Auction and 5-Year BTAN Auction
  • Italy current account for May
  • Spain 3-Year Bonos Auction, 5-Year Bonos Auction and 10-Year Obligacion Auction
  • Israel IPI for May
  • Israel manufacturing PMI for June
  • Turkey central government debt for June 

Friday 21 July, 2017:

  • Spain balance of trade for May
  • Lebanon CPI for June
  • Malta CPI for June
  • Morocco CPI for June
  • Slovenia employment (detailed register data) for May
Round-upalma economics