FRANKFURT (MNI) – The global economic recovery has shown remarkable
resilience in the face of rising oil and commodity prices and the
catastrophes in Japan, but growth now appears to be peaking, the
Bundesbank said Friday.
The latest PMI polls suggest that the world economy “has shifted
down a gear of late,” the German central bank said in its monthly
bulletin.
“Besides recent events in Japan, this can probably be attributed
mainly to the perceptible loss of consumer purchasing power as a result
of considerably higher energy and food prices,” it posited.
“On the other hand, inflation on the commodities markets has eased
appreciably. Against this backdrop, the outlook for the global economy
remains favorable,” the central bank said.
In the Eurozone, the largely export-driven upswing has boosted
business confidence, “suggesting that domestic demand, too, will take
off shortly and increasingly underpin economic activity,” it said.
Eurozone banks reduced their excess liquidity “appreciably” during
1Q, driving overnight rates closer to the ECB’s main refinancing rate,
the Bundesbank noted.
“From a monetary policy perspective, this heightened volatility was
not problematic, however, as market players understood the demand-driven
reasons for the greater volatility in ultra-short money market rates,”
the central bank said.
Eurozone M3 growth “accelerated perceptibly” in 1Q, extending the
upward trend in underlying monetary growth — “the measure that is
ultimately relevant for inflation” — of previous quarters, the
Bundesbank observed.
Loans to the private sector again rose “sharply,” largely driven by
mortgage lending, it noted. Business borrowing also expanded
“significantly” after the decline in 4Q.
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