Page 5 - Reeftankers - Annexure B Sasfin

PART A

ECONOMIC AND MARKET OVERVIEW

Europe
ECB: The ECB held its benchmark refinancing rate at 0 percent on 08 March as expected,
and reaffirmed that the net asset purchases are intended to run at a monthly pace of €30
billion until the end of September 2018, or beyond, if necessary. The deposit facility rate and
the marginal lending facility rate were kept at -0.4 percent and 0.25 percent, respectively.
Still, the bank dropped its commitment to increase the size of its QE program by removing
the easing bias from its monetary policy message.
Growth: The Eurozone economy expanded 0.6 percent quarter on quarter in the final three
months of 2017, and recorded 2.5 percent growth for 2017 as a whole. Growth was mainly
driven by exports and fixed investment while household consumption increased at a softer
pace.
Unemployment: The unemployment rate in the Eurozone edged down to 8.5 percent in
February of 2018 from 8.6 percent the previous month, matching market expectations. It is
the lowest jobless rate since December of 2008 and well below the 9.5 percent level of a year
earlier.
Inflation: The Eurozone consumer price inflation was recorded at 1.3 percent year-on-year
in March 2018 from the previous month's 14-month low of 1.1 percent, and slightly below
market forecasts. Annual core inflation, which excludes volatile prices of energy and
unprocessed food and tobacco and at which the ECB looks in its policy decisions, was
unchanged at 1 percent.

United Kingdom
BoE: The Bank of England voted by seven to two to keep the Bank Rate at 0.5 percent on 22
March, saying growth is likely to pick up in response to the tightening labour market and that
inflation is expected to remain above the 2 percent target in the short term. Also, the bank
reiterated that an ongoing tightening of monetary policy over the forecast period will be
appropriate to return inflation sustainably to its target, raising expectations of a possible rate
hike in May.
Growth: The British economy grew by 0.4 percent quarter on quarter in the final three
months of 2017, resulting in economic growth of 1.8% being recoded for 2017. Fixed
investment increased firmly despite a slowdown in business investment, while net trade
contributed negatively to growth.
Unemployment: The unemployment rate in the UK stood at a 42-year low of 4.3 percent in
the three months to January 2018, which is unchanged from the August to October 2017
period and below market expectations of 4.4 percent. The number of unemployed rose by
24,000 while employment increased by 168,000, beating market expectations of an 84,000
gain.
Inflation: The rate of inflation across the UK fell to 2.7 percent in February 2018 from 3
percent in the previous month and below market expectations of 2.8 percent. It was the
lowest rate since July 2017, as prices increased at a softer pace for transportation, recreation
& culture, restaurants & hotels, and food & non-alcoholic beverages.

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Investment Report Q1 2018