"The uneven state of world growth is again on display. Whereas Japan produced surprisingly strong economic data in the form of machinery orders, the picture out of Europe is less rosy. The Bundesbank foresees a slowdown in Germany, the region’s biggest economy, and the share markets across Europe continued a weeklong swoonMonday as nerves about upcoming European elections combined with evidence of an economic slowdown to sour investors’ mood. The global economy is growing, but the inconsistency in the performance from country to country doesn’t afford investors much confidence in the long-term sustainability of that growth".
Japan's Core machinery orders surged to a six-year high in March, suggesting the April 1tax increase won’t be a crippling blow to the economy. Orders rose 19.1% in March from February, far outstripping expectations for a 6.2% rise.
Core machinery orders are considered a leading indicator of capital expenditure six months or so down the line, and the strong showing in March suggests the sales-tax increase (to 8% from 5%) hasn’t extinguished optimism about the prospects for Abenomics. Still, policy makers will want to see how domestic consumption is faring after the tax before they can breathe easier".
"The German economy will grow at a slower tempo in coming months, the country’s central bank said in its monthly bulletin, citing the prospect for payback from the positive impact of a mild winter in the first quarter. The Bundesbank also warned that concerns about emerging markets and political turmoil in Eastern Europe also could weigh on the German economy.
All up, it was a moderate appraisal from the Deutsche Bundesbank. However, with risks biased to the downside, the report will support the expectation that the influential German central bank will back the European Central Bank’s plans to cut rates into negative territory or take other stimulus measures. When insiders at the Bundesbank told The Wall Street Journal last week that they would support such moves to fight deflation risks, it drove the euro lower. The Bundesbank has a reputation for resisting moves to easier money, so the comments were taken as a strong signal that a policy shift is coming"".
Thailand’s economy shrank sharply in the first quarter, with a six-month old political standoff weighing heavily on growth. Gross domestic product contracted 0.6% on-year and 2.1% on-quarter in the first quarter, worse than expected.
The weakness was broad-based, with consumption, investment and even exports all contracting. No end to the standoff is in sight after the Election Commission ruled that the situation is too chaotic for July 20 polls to go forward as scheduled. The National Economic and Social Development Board also cut its growth outlook for the year, to 1.5%-2.5%, from 3%-4% previously. Look for the central bank, which has already cut rates twice in recent months (50 basis points total), to cut further as the year goes on – though its scope is limited as its peers elsewhere in Asia are moving toward tightening; cutting too much could spark capital flight. In short, as long as Thailand’s leaders and public remain so deeply divided, the chances that the economy will improve are pretty slim.
