Page 34 - Aruba Bank

WORLD NEWS A11
Wednesday 2 September

Wobbly EU economy may get Prime Minister Stephen Harper speaks during a campaign stop at a steel manufacturer in Burl-
bigger push from central bank ington, Ontario, Canada on Tuesday, Sept. 1, 2015. Harper, campaigning for a fourth term, has
refused to recognize that Canada is in a recession, despite new data to the contrary.
DAVID McHUGH
AP Business Writer (Adrian Wyld/The Canadian Press via AP)
FRANKFURT, Germany (AP) — When is a trillion euros
not enough? Could be soon, in Europe’s shaky econ- As election looms;
omy.
Analysts are already talking about when and how the PM Harper denies Canada in recession
European Central Bank might extend its 1.1 trillion-eu-
ro ($1.2 trillion) stimulus program that has been run- ROB GILLIES Harper, campaigning for a growth in the third quarter,”
ning for the past six months in an attempt to boost the Associated Press fourth term on a record of said CIBC chief economist
modest recovery in the 19 countries that use the euro. TORONTO (AP) — Canada economic growth, refused Avery Shenfeld.
They say ECB President Mario Draghi will likely use his has fallen into a recession, Tuesday to recognize that Harper said the economy
news conference Thursday to underline the bank’s dragged down by falling Canada is in a recession. was bouncing back after a
willingness to increase its efforts, if needed, to push up energy prices and eco- But the data shows brief bump. He pointed to
stubbornly weak inflation or limit any damage from nomic troubles in China. that business investment 0.5 percent growth in June.
the economic troubles in China. The Canadian economy and commercial construc- “I think it’s more important
The stimulus program is slated to run through Septem- retreated at an annual tion fell sharply in Canada, to describe the reality of
ber 2016, in monthly purchases of 60 billion euros of pace of 0.5 percent from reflecting cutbacks by en- the situation rather than to
government and corporate bonds. The effort, called April through June after ergy companies respond- have labels,” Harper said.
quantitative easing, or QE, pumps newly printed sliding 0.8 percent the first ing to lower oil prices. Harper called Canada an
money into the economy. It is aimed at raising a rate three months of the year, Economists, however, ex- “island of stability” amid
of inflation that is so low as to provoke fears about the Statistics Canada reported pressed confidence the rough financial waters. The
health of the economy. Tuesday. Two consecutive Canadian economy will country avoided the worst
Yet the impact of the ECB’s program remains unclear. negative quarters are the rebound. Mark Zandi, chief of the 2008 global finan-
Despite major tail winds from low oil prices, a weak technical definition of a re- economist at Moody’s cial crash and fared better
euro and massive central bank stimulus, the euro- cession. Analytics, said the Cana- than most nations. Unlike
zone’s economic recovery remains tepid. Canada is the world’s 11th- dian slowdown can be at the U.S., it avoided a real
On the upside, banks are lending a bit more to com- biggest economy and the least partially traced to estate market implosion or
panies. United States’ biggest trad- the problems in China and credit crisis.
But on the negative side: ing partner. The Canadian said the weakness is largely That was before oil prices
— Inflation is stuck at a low 0.2 percent, a sign de- economy suffered far less confined to energy sector: plunged, dragging down
mand is too weak to drive up prices. damage from the financial “The rest of the Canadian Canada’s economy. Now
— The latest survey of eurozone business and consum- crisis and Great Recession economy is doing OK.” Harper’s bid to become
er confidence ticked up in August. But it increased in than its southern neighbor. Moreover, the economy the first Canadian leader
only 11 of the 19 euro countries. In seven of them, it The economic news could grew at 0.5 percent pace to win four consecutive
fell, including the biggest, Germany. One country, Ire- spell trouble for Prime Minis- in June, first monthly gain in terms in over a century is
land, did not report data. ter Stephen Harper, whose six months. “The economy far from assured. Harper re-
— Unemployment, at 10.9 percent in July, is edging Conservative Party al- is contracting through the minded Canadians of their
down only slowly. And huge disparities remain be- ready faced an uphill bat- first half of the year, but recent prosperity Tuesday.
tween countries — Germany has a record low rate of tle ahead of the Oct. 19. the solid gain in June sug- The Conservatives have run
4.7 percent while Greece’s is around 25 percent. Election. Analysts call the gests that we’ll at least get small deficits and are prom-
— Economic growth was a modest 0.3 percent in the three-way race a toss-up. a breather with a return to ising balanced budgets.q
second quarter.
Draghi made it clear at the time the stimulus program
was announced in January that it could be extend-
ed beyond September 2016 if inflation doesn’t con-
vincingly head higher. He may stress that willingness
again when he speaks after a Thursday meeting of
the bank’s governing council. Some, however, aren’t
ruling out more concrete action at the meeting.
Analysts at financial services group Nomura said they
expected the ECB to take no new steps. But they
added that “the risk of further ECB action has clearly
increased.” ECB action, now or at coming meetings,
could mean an extension of the stimulus program out
to March 2017, Nomura analysts Nick Matthews and
Norbert Aul wrote. They said the ECB could also make
smaller tweaks, such as reviewing technical limits on
its bond purchase that would open the way for ex-
panding them.q