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The consequences of climate change, resource scarcity and pollution are becoming increasingly evident and as a consequence governments and businesses see a growing need to change their business models. A circular economy is an economic model that aims to reduce waste - by preventing waste, by re-use and by recycling – while boosting social, economic and natural capital. While there are several challenges associated with adopting a circular business model, for those that manage to do so, the pay-offs are often substantial.
In line with our predictions, the latest figures show a slowdown in Eurozone real GDP growth to 2.5 per cent year-on-year in the first quarter of 2018, compared to the multi-year high of 2.8 per cent in the last quarter of 2017. Consumer spending is expected to grow less strongly in 2018 and trade related risks remain in the external environment. In May this year, Eurozone inflation reached an unexpected 1.9 per cent, and is thus reaching the European Central Bank’s target of close to, but below two per cent.
Down side risks exist particularly in Italy due to the latest bout of political instability. A no-confidence vote against the government in Spain, and the subsequent political developments has further raised the risks of Eurozone instability with spikes in both Italian and Spanish bond yields at the end of May. Furthermore, leading and coincident indicators released so far in 2018, confirm that Turkey’s economy is slowing, albeit from relatively high growth levels (see country update for more details).
The Turkish economy continued to grow at a significant pace of 7.2 per cent in the first quarter of 2018, compared to 7.4 per cent in the previous quarter. However, leading indicators and market conditions indicate a slowdown for the period ahead. Although delayed, the Central Bank’s response to the recent sharp lira depreciation both reduced inflationary risks and bolstered the bank’s independence and credibility.
Jan Willem Velthuijsen
Chief Economist, PwC Netherlands
Tel: +31 (0)62 248 32 93