FRANCE: 
Business confidence faltered in April, particularly in the manufacturing sector where it landed at 109 points after skyrocketing to 114 in January (the best level since 2001). The capacity utilization rate landed as well, at 85.3% in April, down from 85.8% in January. Overall, the main explanation was lagging demand as consumption did not follow output acceleration in H2 2017. As a result, corporates decreased their output in Q1, after an increase in inventories last year. In 2017, corporates? financing needs rose to -3.1% of GDP, higher than the government?s financing needs (-2.8% of GDP) for the first time since 1983. In Q1, corporates still borrowed the way they borrow and their debt reached approximately 72% of GDP, a new high. This has already had some consequences. Despite a lower number of total business insolvencies in Q1 (-8% y/y), major insolvencies (corporates with turno?ver above EUR50mn) are on the rise: 25 cases were registered during the last 12 months, with a total turnover of EUR 4.1 bn (even higher than in 2015, when total insolvencies reached their all-time high).

GERMANY: 
The sentiment in the German economy continued to deteriorate in April but remains at a still quite high level. The economic momentum is likely to pick up again somewhat in Q2. Even though some indicators such as industrial production and incoming orders recorded declines at the start of the year, the economic situation remains favorable overall. Despite the sharp fall in January, the industrial order backlog in February was still well above the level in Q4 2017. The labor market continues to develop favorably, too. The number of unemployed keeps on declining significantly and employment continues to rise sharply ? good conditions for a clear increase in private consumption this year.

TURKEY: 
At its regularly scheduled meeting today, the Monetary Policy Committee (MPC) kept the official benchmark policy one-week repo rate unchanged at 8% but raised the late liquidity window lending rate from 12.75% to 13.5%. The MPC cited concerns about elevated inflation and inflation expectations, notably rising import prices. Both core and CPI inflation have been in double digits for eight consecutive months now; and the latter is likely to rise again this month (from 10.2% y/y in March) as a result of the currency weakening (TRY on average down -4.4% m/m in April, to date) and rising oil prices (Brent up +6% m/m) since Turkey is a net energy importer. Today?s MPC move is a step in the right direction as it should mitigate concerns that already loose economic policies is further eased ahead of the snap elections called for 24 June. More tightening is needed in order to facilitate a soft landing of the currently overheating economy.

EUROZONE:
The ECB Q1 Bank Lending Survey suggests a positive environment for future financing for the private sector in the Eurozone. Credit standards for loans to corporates eased in Q1 2018, notably for SMEs. For households, credit standards for house purchases eased further compared to Q4. Credit standards on consumer credit eased as well, albeit only slightly. For Q2 2018, banks expect a net easing of credit standards in the three loan categories. Increased competition among banks and the positive economic environment were the main drivers of the easing trend. In addition to inventories, working capital and debt refinancing which continue to weigh positively on loan demand for corporates, higher fixed investment, M&A activity and the low interest rates have been strong boosters in Q1. Across the large Eurozone countries, net demand for loans to corporates increased in Germany, Italy and the Netherlands while remaining unchanged in Spain and France. Net demand from households continued to increase for both housing loans and consumer credit. Banks? expectations continue to point to an increase in net demand in all loan categories.

RUSSIA: 
Last week, Russian financial markets suffered a blow after the U.S. Department of Treasury had imposed new sanctions on 6 April, targeting not only government officials but also seven businessmen and 12 companies they control. By mid of last week, the RUB lost around -11% to the USD, yields on 10-year government bonds rose by +8% and the MOEX stock market index fell by -8%. Markets remained volatile until Monday as many analysts had expected the U.S. to announce further new sanctions owing to Russia?s role in Syria. However, as President Trump drew back from new sanctions yesterday, markets have recovered some ground, improving some 4% against last week?s lows or peaks, respectively. The sanctions will certainly affect the targeted companies, but Russian authorities have pledged to help if needed. For now, we do not expect a significant macroeconomic impact and retain our forecast of +1.9% GDP growth in 2018. Meanwhile, higher oil prices will ensure that Russia continues to run current account surpluses. A first estimate indicates an external surplus of +USD29bn in Q1 2018, up from +USD22bn in Q1 2017 and +USD35bn in 2017 as a whole.

UKRAINE: 
The National Bank of Ukraine (NBU) kept its key policy interest rate at 17.0% last week, following four hikes by a cumulative 450bp between October 2017 and March 2018. Headline inflation eased to 13.2% y/y in March (from 14% in February) but remained well above the NBU?s end-2018 inflation target range of 6% ? 2pp. March inflation was mainly driven by surging prices for food, transport and some services. Core inflation remained also elevated at 9.4% y/y in March. Nonetheless, the NBU considered the current monetary conditions sufficiently tight to bring inflation back to its medium-term target (5% ? 1pp in 2019 and thereafter). Meanwhile, upwards revised data by the State Statistics Service show that real GDP grew by +2.2% y/y in Q4 2017 (gradually slowing down from +2.8% in Q1) and by +2.5% in full-year 2017. It is expected that higher interest rates will cause a growth deceleration to +2.2% in 2018.

NIGERIA: 
In Nigeria, some basic drivers of growth acceleration are currently materializing. The price signal is improving in two ways. First, crude oil prices are currently up to above USD70/bbl, a level where the country runs current account surpluses (+2.5% of GDP is expected in 2018). Second, inflation recorded the slowest pace in two years in March (+13.3% y/y). It should continue to surprise on the downside and reach 10% by year end, with a positive impact on household purchasing power. Exchange rate stabilization is the main explanation behind gradual disinflation since the official and black market exchange rates have been fairly aligned since August 2017. The credit signal is also normalizing. Money supply growth accelerated (+8.1% y/y in February) and capital inflows are back. Foreign currency liquidity is no longer scarce, as foreign exchange reserves are increasing fast and reached USD47bn in March 2018, or nine months of import cover (up from six months one year ago). It should help growth to accelerate from +0.8% in 2017 to +2.5% in 2018.