Important developments today:
1. European Union pledges Greek aid
2. German Business executives remain optimistic
European Union pledges Greek aid. European Union officials have agreed to provide a new aid program for Greece at an EU summit in Brussels today in order for the country to avoid sovereign default. Under the agreement, Greece needs to push €78 billion ($111 billion) of the new austerity measures though parliament, after yesterday’s endorsement of the new five-year plan by experts from the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). Greek Prime Minister George Papandreou said a second aid package could be almost equivalent in size to the first €110 billion program a year ago.
German Business executives remain optimistic. Bucking the downtrend in recent business surveys, the Ifo institute’s index, which is based on a survey of 7,000 executives increased in June to 114.5 from 114.2 in May, implying that these executives viewed the business environment in Germany in June to be more favorable than that of May. This increase in sentiment points to the fundamental strength of the recovery in Germany in spite of ongoing sovereign debt concerns in the eurozone, fiscal and monetary policy tightening, and a slow down in the global economy. Indeed, in June, the Bundesbank raised its economic forecast for growth in Germany in 2011 to 3.1% from an earlier forecast of 2.8%.
Among emerging markets
In Central and Eastern Europe and the CIS, Turkey's manufacturing confidence index fell to 114.6 points in June from 117.2 points a month earlier. The index has been above the 100-point mark separating optimism from pessimism since January 2010 as the economy grows rapidly.
In Latin America and the Caribbean, Paraguay's first quarter GDP contracted 0.7% on a quarter-over-quarter basis after strong growth was recorded in Q4 2010. However on a year-over-year basis, GDP grew 4.6% in the first quarter of 2011.