BofAML: El gran simulacro griego (Global Economic Weekly)

Redacción - Viernes, 03 de Julio

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Global Economic Weekly: The Greek dry run • Global markets wobbled ahead of the Greek referendum.• Despite the heightened risks of Greece leaving the euro area, market reaction has been contained. • A worsening crisis would likely be followed by meaningful policy support.

Global: the Greek dry run 

Greece has edged closer to exiting the euro area, but markets are digesting the shock relatively well.  

United States: the best things in life are free 

Passage of "fast track" legislation means a new free trade agreement spanning the Pacific is probable. The agreement would likely cause only a modest boost to US growth spread over a number of years. The NAFTA experience suggests that free trade also boosts real wages as workers shift into higher productivity areas. 

Europe: the day after the referendum 

Greece will most likely remain in the euro if YES wins, but restoring economic stability will be challenging. Even after a YES substantial challenges remain. Avoiding Grexit after a NO vote would take a lot of forbearance from the Euro Area. 

Japan: three improvements, two risks 

A snapshot of the Japanese economy based on the BoJ's June Tankan survey and major data for April and May shows clear improvement in three areas: capex, consumption, and inflation. There are also risks, however, namely high inventory levels and developments overseas. 

Emerging Asia: "original sin" and external debt  

"Original sin" is returning, a term that refers to the problem emerging economies face in borrowing in their own currencies. An "original sin" index has surged in Malaysia, Indonesia and the Philippines, but remains low in Thailand, India and Korea. External debt ratios have increased the most in Malaysia, Thailand, Taiwan and Indonesia during the QE period. 

Emerging EMEA: Russia - consumer pays for all 

Private consumption will likely lag economic recovery, squeezed by corporate cost-cutting and lack of budget support. Falling consumer incomes support record-high profitability of the corporate sector, which we see as the main driver of renewed investment activity and economic expansion from next year.  

Latin America oikos can withstand Grexit 

A Grexit scenario could feed into LatAm through a sudden stop in capital flows. LatAm's external leverage is low. Brazil and Chile have the highest external exposure. Foreign participation is high in Mexico's and Peru's bond markets. International reserve levels are fine, so in our view LatAm can withstand a moderate risk-off shock. 

Australia: monetary policy forecast revision 

Despite short term downside risks, after an extended "period of stability" we expect the next move in rates will be upward. This cycle will be gradual, beginning in 4Q 2016 and reaching 3.0% by the end of 2017. 

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