The Lastest Macroeconomic News
29.10.2016 12:46 The World Economy Without China
Is the Chinese economy about to implode? With its debt overhangs and property bubbles, its zombie state-owned enterprises and struggling banks, China is increasingly portrayed as the next disaster in a crisis-prone world. I remain convinced that such fears are overblown, and that China has the strategy, wherewithal, and commitment to achieve a dramatic structural transformation into a services-based consumer society while successfully dodging daunting cyclical headwinds. But I certainly recognize that this is now a minority opinion. For example, US Treasury Secretary Jacob J. Lew continues to express the rather puzzling view that the United States “can`t be the only engine in the world economy.” Actually, it`s not: the Chinese economy is on track to contribute well over four times as much to global growth as the US this year. But maybe Lew is already assuming the worst for China in his assessment of the world economy.
27.10.2016 11:23 Sanctions Damage Russian Economy but Don`t Work as Political Tool
The sanctions imposed on the Russian economy cost the country up to 1 percent of the GDP growth every year but they do not work as an instrument of political influence, former Russian Finance Minister Alexei Kudrin said Wednesday. "Russia bears significant expenses because of the sanctions. I always mention the figure from 0.8 percent to 1 percent of the GDP growth that is not achieved… annually. That`s why the words that the sanctions are insignificant are not true. They have a significant impact on our economy, growth and living standards," Kudrin told reporters. The former minister added at the same time the sanctions were not effective as a political tool. "It is another matter that [the sanctions] as the political tool do not function, do not work. I agree with this. It has not influenced our policy at all," Kudrin added. Following the beginning of the Ukrainian crisis, the European Union and the United States accused Moscow of meddling in Kiev`s internal affairs and imposed several rounds of sanctions against Russia, as well as decreasing the general level of cooperation with Russia. The Russian authorities have refuted the allegations, warning that the Western measures are counterproductive.
25.10.2016 14:03 The 5 Biggest Challenges the Global Economy Faces in 2017
International forecasters fear that 2017 will not be a big improvement on 2016 for a sluggish global economy. With plenty of risks ahead including geopolitical and economic instability, here are the five main challenges facing the world economy in the upcoming Year of the Rooster. The International Monetary Fund has warned that rising populism and protectionism have correlated with stagnating economic growth. In its latest “World Economic Outlook,” the IMF`s chief economist Maurice Obstfeld warned that “turning back the clock on trade can only deepen and prolong the world economy`s current doldrums.”
23.10.2016 19:27 Russia`s output decline may be prelude to GDP contraction
Russia`s industrial output was down 0.8% y/y in September and was 0.3% weaker than August on a seasonally-adjusted basis. The manufacturing sector, which accounts for the majority of industrial production in Russia, contracted in September by 1.6% y/y. This more than offset some growth in mining (+2.1% y/y) and utilities (+0.8% y/y). Russia`s manufacturing sector output is volatile and a monthly drop is often followed by a spike (often a result of large orders or projects completed in a single month). However, a closer look at September manufacturing statistics show that the weakness was not confined just to a sector or two, but was quite pronounced throughout industry.
21.10.2016 18:17 Duterte says US lost control of world economy
Shackled with trillions of dollars in debt to China, the US no longer controls the world economy, President Rodrigo Duterte said. Duterte spoke to Chinese businessmen in Beijing Thursday, in the middle of a four-day state visit that is meant to repair ties between Manila and Beijing that have been strained by disputes in the South China Sea. "America does not control the economy now. His place that he is the most powerful industrial nation in the world. That`s a lot of bullshit," Duterte said, to applause from the audience. "How can you be the most powerful industrial country when you owe China and you are not paying it for almost three trillion dollars? Kalaki-laki ng utang mo, may utang ka [You are saddled with huge debt]" he added. China is the biggest holder of US government debt, with $1.9 trillion in bonds, notes and bills as of August, according to Bloomberg data.
19.10.2016 13:20 Fitch: Russian recovery likely to be drawn out and weak
The Russian economy will struggle to return to pre-crisis growth levels in the next few years because consumer demand will stay weak as people save more and spend less, Fitch Ratings said on Tuesday. Consumer demand is the largest driver of Russian growth, while proceeds from energy exports, another important contributor, are seen stuck near multi-year lows as a global glut restrains oil prices. Presenting Fitch`s forecasts for 2016-18, Associate Director for Consumer and Healthcare Tatiana Bobrovskaya said Russian consumers would stay focused on keeping costs down. Some recovery in consumer demand was possible in the low and middle price segments of the market, she said, but stronger demand in higher price segments might only be possible from 2018. "The year of 2017 will still be very difficult for retailers and producers," Bobrovskaya said, adding that consumer confidence in the third quarter of 2016 remained at "crisis levels".
17.10.2016 11:05 Opinion: BRICS? What`s that?
It was the American investment bank Goldman Sachs that first dreamed of the rise of aspiring emerging economies. It established a nice-sounding fund, BRIC, in 2001 to entice investors from around the world. The BRIC countries, chosen with great care, were themselves enticed by the web of possibilities. In 2010, South Africa joined Brazil, Russia, India and China that formed the original BRIC group. It thrived on a grand vision. The BRIC countries felt a special kinship for one another and wanted to change the world. They challenged the dominance of industrialized nations at the World Bank, the IMF and the UN Security Council. They committed themselves to a renewed solidarity among countries of the global south.
16.10.2016 13:03 BIMSTEC in BRICS: A mini-SAARC summit in the making?
Over a period of time the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)- has definitely gone beyond its initial mandate of securing technological and economic cooperation among nations in the coast of Bengal. The inclusion of Nepal and Bhutan into BIMSTEC in 2004 — along with BRICS and SAARC membership — gave India an alternative platform to engage with all its immediate neighbours such as Sri Lanka, China, Bhutan, Burma, Nepal, while keeping Pakistan at an arms length. As host of 19th summit, Pakistan failed to secure confidence of SAARC nations on its anti-terrors effort, five member nations including India, Bangladesh, Sri Lanka, Bhutan, pulled out of the summit, while another BIMSTEC member and also SAARC Chair Nepal made formal announcement of 2016`s SAARC summit`s postponement without specifying any future dates. Therefore it wont be completely wrong to conclude that BRICS-BIMSTEC is the mini-congression of SAARC nations for 2016 with six of the eight – SAARC members participating in it.
14.10.2016 10:36 Global debt reached 225% of world GDP
The IMF said about two thirds of the 2015 total, or about US$100 trillion, is owed by private sector borrowers, and noted that rapid increases in private debt often lead to financial crises. While debt profiles vary by country, the report said that the sheer size of the debt could set the stage for an unprecedented private deleveraging that could thwart a still-fragile economic recovery. “Excessive private debt is a major headwind against the global recovery and a risk to financial stability,” IMF Fiscal Affairs Director Vitor Gaspar told a news conference. “Financial recessions are longer and deeper than normal recessions.” While the United States has de-leveraged since the 2008-2009 financial crisis, the report cited the buildup of private debt in China and Brazil as a significant concern, fueled in part by a long era of low interest rates.
12.10.2016 09:51 Why Is The IMF So Obsessed About Growth?
How do you know when you are obsessed about something? The dictionary definition states you have an idea or thought that is constantly on your mind. At its annual meetings last week, the International Monetary Fund [IMF] showed it is absolutely obsessed with economic growth. At the presentation of the World Economic Outlook and its prediction for global growth, the word "growth" occurred 37 times, more than any other. Add another 22 occurrences at the press conference of managing director Christine Lagarde and 16 at a conference regarding financial stability and you can safely say the institution is obsessed with growth. "My hope at the end of the Annual Meetings is that each Finance Minister, each Governor of the Central Bank, will go back home thinking what can I do in order to propel that growth, which is currently too low for too long, benefiting too few," Mrs. Lagarde said at a conference on Oct. 6.