Weekly Economic Insights - 13 May 2019

Macro Highlights - 5/15/2019

Highlights of the week

Economist insights: China/US trade tensions intensify, smaller deterioration in industrial production in Q1 in the eurozone

International trade

  • On 10 May, Donald Trump raised trade tariffs from 10% to 25% on 200 billion dollars worth of imports from China and threatened to impose hikes on all remaining imports from China…
  • …while on 13 May Beijing announced the implementation from 1 June of trade tariffs of between 5% and 25% on 60 billion dollars in imports from the United States
  • A sharper-than-expected slowdown in international trade could be observed as the diversion of trade flows would not be enough to offset the decrease in bilateral Chinese-American trade
  • China could reinforce its stimulus plan to prevent the impact on its economy from generating an overly abrupt slowdown


  • Industrial production contracted in France, Italy and Spain in March. Conversely, German production rose, notably buoyed by construction
  • On average, y-o-y growth in industrial production improved in Q1 for all countries…
  • ... which supports our analysis according to which the deceleration in the eurozone economy may not worsen

Focus Brazil: Chinese demand should be key for GDP growth and the trend of the Brazilian real in 2019

  • Contrary to what investors were anticipating, the government’s inability to implement major structural reforms was confirmed, as we expected
  • This should weigh on household and business confidence in 2019 and could reinforce the downward pressure on the Brazilian real against the dollar
  • This pressure nevertheless could remain contained if GDP growth were to accelerate slightly thanks to stronger Chinese demand for Brazilian exports, according to our analysis

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