The Lastest Macroeconomic News

19.11.2019 21:31 Russian government plays catch up on spending

Russian budget spending growth materially accelerated in October, as the government is trying to fulfil the annual spending plan. This is a positive sign for corporate activity and also an argument for the central bank to pause the rate cut cycle. The preliminary budget data for 10M19 points towards a material acceleration in the federal spending growth from 5% YoY in 9M19 (downgraded from the initial 6% estimate) to 22% YoY in October. Approaching year-end, the government has started to catch up on fulfilling the spending plans, and there`s more acceleration to come.10M19 spending is 74% of the annual plan vs. 76% allocated in 10M18. In order to comply with this year`s plan, overall spending growth should pick up from 7% YoY for 10M19 to 18% YoY in November-December 2019. The key component contributing to this pick up was the so-called `National Economy` item, which represents spending on infrastructure and other direct economic support measures, also part of the `National Projects` programme: the growth of this targeted spending item skyrocketed from 4% YoY in 9M19 to 42% YoY in October.

14.11.2019 17:19 Russia`s economic growth picks up in Q3 to 1.7%

Russia`s economic growth picked up in the third quarter and slightly exceeded market expectations thanks to a boost from an increase in gas exports, the Federal Statistics Service said on Wednesday. The statistics service Rosstat said gross domestic product grew by 1.7% in the third quarter of 2019 in year-on-year terms, up from 0.9% in the second quarter. Analysts polled by Reuters had on average expected GDP to grow by 1.6%, while the central bank had forecast it at 0.8%-1.3%. Based on the data upon which this preliminary third-quarter GDP estimate was formed, we see that it was significantly influenced by the increase in wholesale trade turnover, in particular the gas trade, said the head of Rosstat, Pavel Malkov.

30.10.2019 12:09 The unemployment rate in Russia continues to remain at a fairly low level

The unemployment rate in Russia rose in September, although it continues to remain at a fairly low level. Last month, Rosstat calculated the figure at 4.5% compared with 4.3% a month earlier. In August, unemployment in our country reached a historic low, and indeed in recent months it has been near the lowest levels. At the same time, analysts note that the distribution of unemployment rates in the regions is extremely heterogeneous. So, if in Moscow and St. Petersburg this indicator is 1.3% and 1.4%, respectively, then, for example, in Ingushetia exceeds 26%. In other republics of the North Caucasus, the situation on the labor market is not the most favorable, although the situation here is still better - 9-13%. North Ossetia-Alania and the Stavropol Territory stand apart - 3.7% and 4.8%. Rosstat reported that, as of October 23, 2019, the registered unemployment rate was only 0.8% of the economically active population. In absolute terms, this is only 642.1 thousand people.

29.10.2019 20:23 Russia accounts for 97% of the trade in the EEU

Russia dominates the trade within the Eurasia Economic Union (EEU). In 2018 trade with Russia accounted for 96.9% of all trade within the Eurasian Union; trade among the four smaller countries accounted for the remaining 3.1%. In 2000, total trade turnover between the five countries that would one day form the EAEU was worth $14.1bn. Of this, turnover between Russia and the four other members stood at $13.9bn meaning Russia accounted for 98.6% of trade within the future bloc. The total value of trade within these countries rose steadily over the next decade or so, reaching a peak of $73.1bn in 2012. Then the 2014-16 regional slowdown (driven by the slump in global energy prices and Western sanctions on Russia after it annexed Crimea) led to a sharp decline in trade within the EAEU. In a way, the formation of the EAEU could be seen as Russia`s response to the economic slowdown and a way to guarantee a captive market for its exports. Yet even with the creation of the EAEU in 2015, total trade turnover between member economies has not recovered to its 2012 peak.

24.10.2019 18:43 S.Korea`s GDP growth slows in Q3

South Korea`s real gross domestic product (GDP) growth slowed down in the third quarter on lower fiscal spending and external uncertainties, central bank data showed Thursday. The real GDP, adjusted for inflation, grew 0.4 percent in the July-September quarter compared with the prior quarter, according to the Bank of Korea (BOK). It was a downturn from a 1.0 percent expansion in the second quarter. The real GDP contracted 0.4 percent in the first quarter on a quarterly basis. The third-quarter GDP growth missed market expectations of 0.5-0.6 percent. It was attributable to the government`s lower contribution to economic growth in addition to the lingering external uncertainties. Fiscal spending raised the GDP expansion by 0.2 percentage points in the third quarter, lower than a 1.2 percentage point contribution in the second quarter. The private sector`s contribution to the GDP rebounded from minus 0.2 percentage points in the second quarter to 0.2 percentage points in the third quarter. Net export lifted the GDP growth by 1.3 percentage points in the third quarter, marking the first rebound in a year.

12.10.2019 21:58 Brazil`s GDP growth to slow down to 0.9 pct in 2019

Brazil`s gross domestic product (GDP) will grow 0.9 percent this year due to slow economic recovery, down from 1.1 percent in 2018, the country`s top industry confederation said Friday. Poor economic and industrial performance can be attributed to the sluggishness of the country`s reform agenda, said the third-quarter report by the National Confederation of Industry (CNI). The report also showed a disconnect between the growth rates of consumption and industrial production. "Retail sales have been growing, but this has not spread to industry, which continues to be almost stagnant mainly due to the lack of competition," said Flavio Castelo Branco, executive manager of the economic policy unit at the CNI. Brazil`s unemployment rate is projected to drop to 11.9 percent, a decrease of 0.4 percent compared with 2018, said the report. The CNI also estimated that the general government debt-to-GDP ratio will rise from 77.2 percent in 2018 to 78.4 percent in 2019.

23.09.2019 19:53 Russian GDP grows 1.1 pct in first eight months this year

Russia`s gross domestic product (GDP) growth accelerated to 1.1 percent year-on-year in the first eight months of 2019 from a 0.9-percent year-on-year growth in January-July, the Russian Economic Development Ministry said. Russia`s GDP expanded 1.6 percent in August, and economic growth continued to recover from the weak dynamics in the first half of the year, the ministry said in its monthly business activity report. However, the August figure was lower than the July rate of 1.8 percent, the ministry said, attributing the spike in July mainly to robust industrial growth. According to the ministry`s estimate, a significant positive contribution to the GDP growth rate of 0.6 percentage point in August was made by industrial production and another 0.1 percentage point by agriculture. Earlier this month, the Russian central bank said it had lowered its GDP growth forecast for 2019 to 0.8-1.3 percent from previous 1.0-1.5 percent due to weak economic activity observed since the beginning of the year.

15.09.2019 14:18 IMF: Trade war could cut world GDP by 0.8%

Tariffs imposed or threatened by the United States and China could shave 0.8 per cent off global economic output in 2020 and trigger more losses in future years, the International Monetary Fund says. IMF spokesman Gerry Rice says trade tensions are beginning to affect a world economy already facing challenges including a weakening of manufacturing activity not seen since the global financial crisis of 2007-08. US Treasury Secretary Steven Mnuchin says he has not seen the new IMF forecast but does not expect the impact to be as significant in the United States. "I don`t see it in US as that big an impact," he said on Thursday when asked about the IMF forecast after an event hosted by the New York Times. Rice told a regularly scheduled IMF news conference the global lender is to release a new revised economic outlook next month but provided no details.

06.09.2019 20:36 Russian CPI underperforms in August, supporting rate cut

Deceleration in the Russian CPI growth from 4.6% year-on-year in July to 4.3% in August is a positive surprise, as it underperformed the consensus forecast of 4.4% and our cautious 4.5% expectations. This time the food segment (c.38% of the CPI basket) was the key driver of the slowdown, with price growth there decelerating from 5.5% YoY in July to 5.0% YoY in August, mainly thanks to the strong 10.1% month-on-month deflation in the fruit and vegetable segment (the annual growth rate remained positive but decelerated from 5.4% to 1.3%. Noteworthy, prices for almost all other food items showed an acceleration in the annual growth rate. Prices for non-food products and services decelerated by 0.1 percentage point to 3.5% YoY and 4.4% YoY, respectively, being a minor drag on overall CPI. We note that the gasoline prices, which is included into the non-food product segment, are posting continued acceleration - from 1.4% YoY in June to 1.8% YoY in July and 2.2% YoY in August, reflecting expiration of the agreement between the government and the oil majors, as well as the end of the high base effect.

22.08.2019 20:21 Japan GDP growth to slow to 0.5% in 2019

The looming implementation of consumption tax hike will weigh on economic growth. Japan`s economy is tipped to grow 0.5% by end-2019 from 0.8% in the previous year despite a stronger-than-expected Q2 growth of 0.4%, according to Fitch Solutions. Private consumption is expected to contract 0.3% in light of higher consumption tax. In October, the tax will be raised from 8% to 10%. This draws parallels to a similar development when private consumption contracted 0.9% in 2014 after Japan increased consumption tax in April of that year. Household consumption grew 0.7% and 1.0% yoy in Q1 and Q2, but Fitch noted this to be a potential frontloading of purchases ahead of the tax hike. Likewise, exports is projected to contract 1.2% this year, in light of the US-China trade war and dispute with South Korea on restrictions in exporting chemicals as well as public backlash against Japanese goods. Exports have already contracted 2.2% and 2.9% yoy in Q1 and Q2. However, Japan may use the revenue from the tax hike to finance the rise in social security. As such, government consumption is expected to grow 1.9% in 2019.

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