0605-0609 Newsletter

Macro & Business Matters in EU

European airport traffic 'closest yet' to full recovery from COVID-19

The trade association representing European airports said passenger traffic rose 21.1% in April from a year earlier.

That was still 7.6% below April 2019, ACI said, but an improvement on the 10.6% decline across the first quarter from pre-pandemic levels.

"This is quite remarkable when the increase in air fares is more than 6 times above consumer price inflation," ACI Europe Director General Olivier Jankovec said in a statement.

While Icelandic, Cypriot, Greek, and Portuguese airports among others exceeded pre-COVID levels, those in Slovenia, Germany, Slovakia and the Czech Republic were the furthest from fully rebounding.

Turkish inflation dips under 40 pct for first time in 17 months

Consumer prices rose by 39.6 percent on an annual basis and were almost stable, at 0.04 percent, compared to the previous month, according to the Turkish Statistical Institute (Tü?K).?

Tü?K said last week that it would apply a "zero price" method for natural gas in the consumer price index (CPI) calculations for May, a month in which President Recep Tayyip Erdo?an won reelection.?

The government had pledged ahead of last month's elections that it would provide free gas in May, and a monthly free 25 cubic meters until May 2024. The move is seen costing the government 40 billion Turkish Liras ($1.89 billion). The weight of natural gas in the inflation basket is 2.9 percent.?

Housing prices, which include natural gas, dropped 13.79 percent on a monthly basis, and were the only group to record a decline last month, lowering the overall monthly reading by 2.09 percentage points.?

The domestic producer price index was up 0.65 percent month-on-month in May for an annual rise of 40.76 percent, according to the Tü?K data.?

Inflation was stoked by a late-2021 currency crisis and it touched a 24-year peak of 85.51 percent in October. It eased to 43.68 percent by April with a favorable base effect and relatively stable lira.

Turkish lira hits new low against US dollar

The Turkish Lira sank to a new low against the dollar yesterday, more than a week after the reelection of President Recep Tayyip Erdo?an.?

The currency, which was propped up by the Central Bank before the presidential election, fell 6.7 percent to 23.16 liras per dollar in the afternoon trade.

Under Kavc?o?lu’s watch, the bank's policy rate was decreased to 8.5 percent. It had been at 19 percent in 2021.?

?pek ?zkarde?kaya, senior analyst at Swissquote Bank, suggested that ?im?ek was now supposed to?“restore investor confidence.”

Erkan becomes first female governor of Türkiye’s Central Bank

Hafize Gaye Erkan, a finance executive in the United States, has become the first-ever woman to head Türkiye’s Central Bank after President Recep Tayyip Erdo?an appointed her as the institution’s governor on June 9. Erkan, former co-CEO at First Republic Bank and managing director at Goldman Sachs, takes the reins after Erdo?an’s reelection on May 28 and just under a week after he signaled a pivot away from unorthodoxy with a new cabinet.?

The fifth central bank chief in four years, the 41-year-old replaces ?ahap Kavc?o?lu, who spearheaded Erdogan’s rate-cutting drive.?

The announcement of Erkan’s appointment in the Official Gazette was accompanied by a decision to appoint Kavc?o?lu as head of the Banking Regulatory and Supervision Agency (BDDK), Türkiye’s banking watchdog.?

The Central Bank’s Monetary Policy Committee (MPC) is scheduled to have its first meeting under the governor on Jun 22, when it is expected to raise the policy interest rate from the current 8.5 percent.

OECD sees limited growth pick-up as rate hikes weigh

Global economic growth will pick up only moderately over the next year as the full effects of central bank rate hikes are felt, the OECD said on Wednesday, the latest to flag the impact of monetary tightening.

The world economy is set to grow 2.7% this year, the Organisation for Economic Cooperation and Development (OECD) said, up from its previous forecast of 2.6% in March.

Though boosted by the lifting of China's zero-COVID policy, that would be the lowest annual rate since the 2008-2009 global financial crisis with the exception of the pandemic-hit year of 2020, the Paris-based organisation said.

On Tuesday, the World Bank also cited the growing impact of rate hikes as it raised its forecast for world growth this year to 2.1% but for 2024?cut?it back to 2.4% from a previous 2.7% forecast. A sharp fall in May for?Chinese exports?released on Wednesday also pointed to weakening global demand.

OECD forecast: Greek economic growth will remain robust in 2023-2024

Greek economic growth will remain robust with real GDP growth projected at 2.2% in 2023 and 1.9% in 2024, the Paris-based Organisation for Economic Cooperation and Development (OECD) said in its economic outlook survey released on Wednesday, ANA reports.

More specifically, the OECD noted that economic growth remains strong despite headwinds with fixed capital investments expected to grow by 8.9% helped by the implementation in the framework of the Recovery and Resilience Fund.

Irish services sector growth slows in May

Growth in the Irish services sector slowed slightly in May but new export business grew at its fastest rate since last summer and business expectations improved, a survey showed on Tuesday.

The AIB S&P Global Purchasing Managers' Index (PMI) slipped to 57.0 from 58.4 in April, remaining above the 50 mark separating growth from contraction as it has for over two years.

The survey's subindex for employment fell, as did those for both prices charged and input prices.

But the new export business improved slightly to hit its highest level since July last year and business expectations rose to their second highest level in 15 months.

"There was yet another steep increase in new business volumes in Irish services firms, including new export business, reflecting strong demand conditions, both at home and abroad," said AIB Chief Economist Oliver Mangan.

Euro zone producer prices down for seventh month in April

Euro zone producer prices fell for a seventh consecutive month in April, data showed on Monday, almost entirely due to declining energy prices.

The European Union's statistics office Eurostat said prices at factory gates in the 20 countries sharing the euro fell 3.2% in April from March and were 1.0% higher year-on-year.

Producer prices are an early indication of trends in consumer inflation, which the ECB wants to keep at 2.0% over the medium term, but which?stood at 6.1% in May.

The ECB has raised its deposit rate by a combined 375 basis points to 3.25% over the past year and has essentially committed to another 25 basis point hike on June 15. Declining inflation has fuelled a debate about the need for rate increases beyond then.

Eurostat said the monthly fall in producer prices in April was due to a 10.1% drop in energy costs and a 0.6% easing in prices of intermediate goods.

SOURECE: REUTERS,?Daily News, Daily Sanah

CRE & Tourism in EU

ACI: Greek Airports Among Europe’s Best-performing in April

Greek airports are among Europe’s?best-performing?with passenger traffic on the rise and surpassing?pre-Covid 2019?levels, according to data released this week by the?Airports Council International Europe (ACI Europe).

Greece’s airports were among the best-performing in April reporting an?11 percent increase?in passenger traffic. Overall in the EU, traffic grew by?19.1 percent?for the month compared to April 2022 but was still down by 8.1 percent on pre-pandemic levels.

At the same time,?Athens International Airport (AIA)?was among the large airports posting the best performance in April up by?7.6 percent?relying on leisure/VFR demand and/or budget carrier traffic.?

Additionally, Rhodes airport also marked a 39.3 percent increase in April over the same month in 2022 and was placed among the airports reporting the highest increases in passenger traffic for the month.

Increase in investment activity in Porto

A great deal of interest in the real estate market in Porto was registered during the first quarter of 2023 from national and international companies and investors, spanning across several sectors.

The demand in the Porto region has recovered gradually since the drop seen during the pandemic, and in 2022 58 500m2 of transactions were made, up 3 percent in comparison to the previous year.

The first trimester of 2023 has likewise seen a 22 percent increase in comparison to the same time period during 2022, with the biggest deals closed since last year being several pre-lets and co-working spaces.

€267 million have been invested in commercial real estate since 2022. Interestingly, compared with other areas of Portugal, there are a higher number of national investors financing projects in Porto. Since last year, national investors have accounted for 38 percent of the total transaction volume.

Despite growing uncertainty across the global economy, prime yields registered increases across several sectors in Porto in 2022, as well as during the first quarter of 2023. This level of interest and investment in Porto looks highly promising for the city, and the north of Portugal as a whole.

SOURECE: Google News, GTP, Greek City Times, PORTUGAL NEWS, Daily News, Daily Sabah?

Market Performance & Institution Views

Pan-European real estate funds generate negative investment returns in Q1

Pan-European real estate funds generated negative investment returns for the third consecutive quarter in the first three months of 2023, according to MSCI’s Pan-European Quarterly Property Fund Index.

The funds generated a negative total return of -1.4% in the first quarter compared with the previous quarter, the index showed, as property values fell.

All-property total returns across open-end funds in the MSCI Pan-European Quarterly Property Fund Index stayed negative at -1.4% in the first quarter of 2023, although the picture did moderate after the Q4 2022 result of -6.9%.

The issues impacting European commercial property meant a third successive quarter of falling capital values, which dragged down total returns. Office and industrial account for 80% of the index by value, and both sectors recorded negative capital growth as yields continued to expand under the pressure of higher interest rates.

The Index tracks the performance of 19 open-ended cross border funds, with a Net Asset Value of EUR 50.4 billion as at March 2023.

SOURECE: HNR, CRE HERALD, Hospitality Investor

Author：

Cheryl Luo & Vicky Feng