Intesa Sanpaolo : Italy. The Draft Budgetary Plan confirms that the net Budget in the strictest sense for 2021 will be accommodative by almost 25 billion euros..
Weekly Economic Monitor – 23. October 2020
Intesa Sanpaolo – Research Department
however, thanks to the payment of initial subsidies from the EU, the final amount could come close to the 40 billion mark. The main criticalities, not so much in 2021, but over the following years, will be the uncertain funding of some items, such as the extra revenue expected from the fiscal retroaction effects of the Next Gen EU programme.
US elections: fasten your seatbelts!
On the eve of an extraordinarily uncertain election, voting polls award a lead to Biden over Trump and point to a likely Democratic majority in the House and a neck and neck race for control of the Senate. The outcome of the vote in the battleground states is still hard to predict, and keeps high the uncertainty over a majority within the Electoral College, that will nominate the President. Potential disputes, and the long process of counting mail-in ballots, could keep the situation unclear until mid-December.
The week’s market movers
In the Eurozone , several economic indicators will be released this week. The initial estimates of 3Q GDP will outline a very sharp and widespread quarterly rebound, which nonetheless in our view will significantly lose steam in the closing stages of the year. The last round of October confidence data should also outline a widespread worsening of sentiment, due to the resurgence of the COVID contagion curve and to the new restrictive measures put in place in the various countries. October inflation is forecast to drop further in Germany, to remain stable in France and in the Eurozone as a whole, and to rise back slightly (temporarily) in Italy. The ECB meeting is not expected to bring new monetary policy measures, but will acknowledge the increase of downside risks.
This week, a host of important data releases are lined up in the United States, albeit mostly retrospective. Focus will be increasingly on the election campaign, and on expectations ahead of the post-vote period. Data releases will include the first estimate of 3Q GDP, that should confirm a solid rebound, by 32,7% q/q ann., driven by consumption and also supported by investments and public spending. September data should prove to be still positive, with orders of durable goods, new home sales, and personal spending and personal income, all showing further progress. The consumption deflator, for both the headline and core indices, should show moderate changes, of close to 0.2% m/m, still held back by the weak price trend in the services sector.
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