AmWatch - Economic Update : Stimulus in the Eurozone to persist until September 2016, 5 Jun 2015

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Economic Update : Stimulus in the Eurozone to persist until September 2016

Last month, the European Central Bank (ECB) said that it would frontload bond purchases in May and June under the monthly bond buying program. That stirred uncertainties for the currency bloc in terms of the span of the stimulus program, triggering the depreciation of the EUR currency during the later part of May. On Wed, ECB’s President Mario Draghi rejected concerns among investors that a recent rise in consumer prices could spur the Bank to wind down its EUR1.1tril bond-buying program before September 2016. According to Draghi, the bond buying program will proceed full throttle and could even be increased if needed. The QE program is tied to inflation and to achieve sustainable price increase towards the ECB’s long-term target.

Since March, the ECB has conducted bond purchases in roughly EUR60bil monthly increments, which it plans to do so at least until Sept 2016 to boost inflation and output. Note that the Eurozone inflation was 0.3% YoY in May, well below the ECB’s target near 2%. However, it has come a long way from January, when prices contracted by 0.6%. Draghi is likely to press for more reforms across the Eurozone to stir a more pronounced upswing in economic growth. GDP in the Eurozone expanded by 1.0% YoY in 1Q15. The Bank projects annual real GDP to increase by 1.5%/ 1.9%/ 2.0% in 2015/ 2016/ 2017, respectively. Currency wise, the EUR dipped against the USD to close at EUR0.9198 per USD on 26 May, compared to 0.8735 on 15 May. We gather that the EU contributes 9.5% of Malaysia’s total exports in March, with Netherlands alone accounting for 2.8% of total exports. Despite the relatively weak exports in the recent months, shipments to EU had advanced by 4.5% YoY in March. This compares to Malaysia’s total exports growth of 2.3% during the month.

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Westports Malaysia : To up cargo handling

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Sunway : Bags RM244mil commercial building contract

Malakoff Corporation : T4 plant on track

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