THEN, BUY DOLLARS?
Prevent the European recession and increase inflation: see the good intentions of ECB chairman Mario Draghi for 2015. And then the US is busy with the economic revival. The first US interest rate hike is approaching. According to KBC experts, this will result in a year of positive but volatile stock exchanges with absolute highest performance for the dollar.
This year should be a year of recovery in the euro zone and for the US acceleration year. Neither one nor the other came out. The growth of America had a false start because of a very cold winter. The expected growth is the economic contraction during the first quarter. The world breathed a sigh of relief after the strong figures from the second quarter.
In the euro zone we see a retreat. The year started relatively well. In May many business bankers even raised their growth expectations. But since then it has only declined. The crisis of Ukraine weighs mood, fading belief translates into fewer investments. Germany almost escaped recession in the third quarter. The euro zone is hardly growing, thanks to reforms in countries such as Portugal, Spain, Ireland and also the Netherlands. Such "bruises" could become pillars for 2015. The reforming countries, such as France, Italy and Belgium, threaten to become more chaotic. The fact that the Italian economy is as big today as fifteen years ago is a vague sign.
Is a triple dip or not
Experts at KBC do not believe that the eurozone will experience a third recession - two-quarters of negative growth - by 2015. Thanks to a 10% fall in oil prices that pushed economic growth behind 0.2 percentage points. The same euro decline against major trading partners creates a cumulative positive effect of 1 percentage point over a 3-year period. European savings will be reduced. Nearly a third of savings implemented over the previous four years have been programmed for the next four years. Thanks to the stress test and increased capital position, the wait now is for greater investment demand.
Perhaps the investment fund set up by the European Commission has recently been helpful. Because the structural awakening in the euro zone is only possible if the investment cycle boosts again.
Inflation
Growth maintains a high debt burden on portable eurozone. Growth should result in higher inflation, but .... ECB does everything it can to deliver growth and inflation it odds. With the reduction of the interest rate to 0.05% the bottom has been achieved. Is there only a decline in the euro to boost growth and inflation? Make more euros? The ECB's plan is aimed at a net expansion of the ECB's 1 000 billion euro balance by the end of 2016. Buying German government bonds increasingly only with their 'Nein' - is an integral part of the plan. In the first quarter of 2015, KBC economists are expecting an official announcement. Mario Draghi has indicated that he will do all he can to bring inflation back towards the 2% target as soon as possible.
And the dollar?
The growth differential between the US and the euro zone is increasing. This also applies to interest gaps that will increasingly play for US profits. And for the ECB, the weakening euro is the only piste left for further relaxation of monetary policy. Appreciation of $ 1.24 to $ 1.15 per euro by the end of 2015 certainly includes the possibility.
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