Pick-up continues as Greek drama plays on

Sun Jun 7, 2015 4:05am EDT
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By Jonathan Cable

LONDON (Reuters) - Economic indicators are this week expected to show signs of continued, if modest, progress in much of the world -- all of which could be blown off course if the standoff between Greece and its lenders leads to a rupture in the euro zone.

The currency bloc has been a millstone around the neck of the world economy since the financial crisis began and the ongoing drama surrounding Greece and its ability to repay its debts has added to that burden.

Athens delayed a key debt payment to the International Monetary Fund on Friday, branding as "absurd" the terms of a proposed aid deal from lenders.

"Greece's continued resistance to its creditors' demands on key sticking points like pensions, coupled with the missing of Friday's IMF payment, suggests that the risks of a Greek euro exit are still climbing," said Jonathan Loynes, chief European economist at Capital Economics.

A G7 summit starts later on Sunday with the meeting focusing on global growth, climate change and the ongoing sanctions against Russia. Add to this Greece, which is not officially on the agenda but which is bound to be a major theme for world leaders on the sidelines.

After positive job data from the U.S. on Friday focus this week will be on the European countries releasing industrial production numbers -- largely expected to show accelerating output -- and revised GDP numbers which are likely to confirm euro zone economic growth was subdued at the start of the year.

"However, forward-looking indicators, such as real narrow money, suggest a sharp acceleration in industrial production growth in the next 12 months," economists at Credit Suisse wrote in a note to clients.

On Monday, first quarter GDP numbers out of Japan are expected to be revised up from initial projections, helped by a pickup in capital spending.   Continued...

An Orthodox priest walks in front of the parliament building in Athens June 6, 2015. REUTERS/Alkis Konstantinidis