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Belgium by the numbers, February 2015

Belgium by the numbers, February 2015

1.       GDP 4th quarter (compared with 2014): +1,0%

2.      Inflation from January 2015 to February 2015 in Eurozone: +0,64%

3.      Industrial production in December year over year: o,3 %

4.      Unemployment rate in January: 8,5%

5.       Current Account Balance in September: -0,4 % of GDP

6.      Budget Balance (expected): -3,1 % of GDP

7.       Ten year government bonds (February 2015): 0,55%

It is good to see that the inflation rate was up 0,64% from January to February in 2015. The Consumer Price Index statistics for February further show that the Eurozone’s inflation rate continues to increase towards the ECB’s target. For the first time since early 2014, the CPI has increased on a month to month basis as it rose one basis point from January to February. In general, periods of increasing CPI for a short period are usually signs that inflation will increase for the time being. CPI and inflation in the Eurozone should continue to increase over the next couple of months easing fears of deflation.  

In terms of currency, the euro held its ground for most of February besides dipping down to a number just above 1.10 to 1. Even when Germany approved the extension for Greece’s debt repayment timetable at the end of February, the euro still weakened. While this number didn’t move that much, it is expected to drop even lower at the start of March as the first month of the quantitative easing program is starting then. Another factor driving the currency against the dollar will be the Fed’s upcoming statement about the state of the U.S economy and how they are going to address interest rates. 

The European Union has created some controversy as there is new legislation in the works for next year trying to give themselves more power in negotiations on gas and nuclear-fuel supplies with Russia. The EU is trying to reduce the energy dependence of European countries from Russia as it is currently the world’s biggest energy importer. This will affect Belgium due to the extent of their imports from Russia.  In addition to importing a substantial amount of gas and oil from them, they account for a majority of nuclear energy imports along with France and Slovakia. This could cause some concern as Belgium would not want their control of relations with Russia to be diminished. 

The unemployment rate rose very minimally for the past month. Since February of last year, there has been very little movement as mostly the rate has fluctuated between 8.4-8.6%. Hopefully the ECB’s actions will stimulate the growth of the economy and reduce the percentage sooner than later.  

Ten-year government bonds have decreased from 0,65% to 0,55% since last month. While this is good in the short-term for investors, hopefully the rate will increase as the rest of the economy starts to recover and shows signs of growth. 

By Brandon LaBella at Dunhill Financial, to learn more about him:
https://www.linkedin.com/pub/brandon-labella/a7/814/477/

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