Greece bounces back with 0.8% growth in Q2Greek parliament holds emergency session to ratify €85bn bailoutEuropean stock markets rally after China’s yuan pledgeGermany open to debt relief for Greece, but no haircut 12.17pm BST Marcos Casarin at Oxford Economics has looked at the potential implications of China’s yuan devaluation for the world economy.We simulate an “other things equal” 10% yuan depreciation against the US dollar on our global economic model. It has a small positive effect on Chinese GDP, but is deflationary for other countries. Other things are not exactly equal of course, and we also provide a reminder of the more powerful simulated impact on the global economy of a sharp China slowdown to 4.4% growth over the medium term.The “naïve” simulation of a 10% renminbi depreciation (holding other things constant) would reduce inflation in some countries (the German CPI is 0.3pp lower by 2017). The Fed would most likely delay its first rate hike beyond September and global bond yields would remain lower for longer. There are some negative output implications, particularly for China’s competitors in Asia. The global recovery would be a bit slower than we currently forecast, with growth of 2.9% in 2016 rather than 3%. 12.04pm BST Here is our full story on the strong GDP figures for Greece. Continue reading...
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