WEEKLY ECONOMIC COMMENTARY, 26 FEBRUARY 2012 (By DIFC)

See: http://www.difc.ae/difc-blogs/weekly-economic-commentary-february-26-2012

Eurozone’s backing for the Greek debt deal failed to stimulate the markets much; but, positive data released helped US stocks reach the highest level since 2008 while Asian markets rallied. Regionally, the Abu Dhabi and Saudi markets hit 5-month and 3-year highs respectively last week, boosted by recent oil price trends and improved global sentiment. Among currencies, euro gained to reach a 11-week high against the dollar while the yen was at a 7-month low. Oil surged to a nine-month high after an unsuccessful IAEA visit to Iran, while gold prices also rose, despite dollar’s weakness.

The deal over the debt restructuring in Greece and the second bailout program were not mistaken as the end of the ordeal, like happened in previous occasions. The notion that there is no silver bullet for a crisis of such magnitude in Euroland is probably the most positive outcome of the process so far. The data flow confirmed that the slowdown spread to Asian economies at the end of 2011, although policymakers in the region have more ammunition and fiscal space to revive growth.