German worriesBy Peter Rosenstreich
This weekend the German Socialist party will vote on whether to supports a ‘Grand Coalition’ with current Chancellor Angela Merkel and her centrist Christian Democrats. A yes seems more likely, but not assured.
If the vote is no, German politics become a mess: no coalition of centre parties, perhaps a minority government and possibly no Merkel – who has been a stabilising force for years. A no even raises the possibly of snap elections, which could help the right-wing, anti-immigration AfD party.
The binary aspect of this vote makes it worrisome. Either we’ll get a big sigh of relief, or a big headache.
Can Berlusconi win?By Peter Rosenstreich
Italy will vote on Sunday, and we expect divided results: a hung parliament, followed by lengthy coalition negotiations. Polls suggest a coalition of Democratic Party, Forza Italia and Five Star, from which we expect no major policy changes.
However, Italian voters can surprise. There is a realistic chance that former Prime Minister Silvio Berlusconi’s centre-right block will top 40% and so earn the right to form a government. If the German socialists reject Merkel and the Italians pick Berlusconi, we’re in for a wild next week.
South Korean trade seesawsBy Vincent-Frédéric Mivelaz
South Korea’s export growth slowed in February to 4% (average: 8.70%), its weakest rate since November 2016, due to decreasing demand and New Year’s holidays that cut working days and shipments. With global demand holding strong, we expect March exports to approach 6%. US tariffs might dampen this: South Korea remains America’s third-largest steel supplier after Canada and Brazil.
South Korea’s trade surplus will head higher, supported by exports, stable inflation (4Q: 1.50%), improving private consumption and the Bank of Korea’s cautious normalization measures (Repo Rate maintained at 1.50% since November 2017).