The Lastest Macroeconomic News
26.04.2016 13:06 Russian Economy Ministry forecast sees oil at $40 until 2019
Russia should use an average oil price of $40 per barrel as the benchmark for its 2017-2019 budgets, the Economy Ministry said on Thursday, giving in to Finance Ministry arguments for fiscal caution. A slide in oil prices and Western sanctions have pushed Russia into recession, complicating the Finance Ministry`s task of keeping the budget deficit manageable. The Economy Ministry last week submitted forecasts that proposed a base budget scenario in which oil prices rose to $45 per barrel next year and $50 in 2018-2019, an official in policy-making circles said. But it has since bowed to the Finance Ministry`s pressure. "The lower the price (in the forecast), the better for the (finance) ministry," the source said. "Spending is cut automatically." Economy Minister Alexei Ulyukayev presented the forecasts as prudent, although his ministry has often backed more government spending to stimulate the economy. "I believe the base scenario has a healthy dose of conservatism," he said in televised comments. Prime Minister Dmitry Medvedev said conservatism was justified. "It is better to lean in projections towards understating potential revenues than later try to find additional reserves to balance the budget," Medvedev said.
25.04.2016 15:27 Russia Economy 2016: No GDP Growth Expected Amid Low Oil Prices and Sanctions
There`s more bad news for the Russian economy. The country`s government officials admitted there would be no gross domestic product growth in 2016. Prime Minister Dmitry Medvedev said as much Thursday while giving a more optimistic forecast than the World Bank`s prediction of a 1.9 percent contraction this year. “In the basic version [of the government`s macroeconomic forecast], GDP growth this year will remain at around zero or be slightly negative. A slight growth of 1 to 2 percent is expected in 2017-2019,” Medvedev said. Economy Minister Alexei Ulyukayev forecasted an economic contraction of 0.2 percent in 2016 with no growth in Russia`s industrial output. He said he expected consumer price inflation to hit 6.5 percent in 2016. That was good news compared to the World Bank`s forecast. “Russia`s longer-term growth path will depend on the strength of its structural reforms. Economic reforms designed to bolster investor confidence could greatly enhance Russia`s long-term growth prospects,” Andras Horvai, World Bank country director for the Russian Federation, said earlier this month.
22.04.2016 07:29 Bank of Russia Warns Inflation May Stall at `Unacceptable` Level
Russian inflation is at risk of stalling at 6 percent to 7 percent after slowing for seven months, a level that central bank Governor Elvira Nabiullina called “unacceptable” for speeding up the economy and spurring investment. “We shouldn`t lose vigilance,” Nabiullina said at the Finance Ministry`s annual meeting in Moscow on Wednesday. With annual inflation currently running at 7.2 percent, next year`s 4 percent target is “realistic,” she said. “Without low inflation, there will be no low long-term rates in the economy and no predictable conditions for running a business, which is critically necessary for economic growth,” she said. Wariness about the inflation outlook signals a measure of caution on the part of the central bank before it reviews interest rates in nine days. Policy makers overshot their target for price growth in 2015 for a fourth consecutive year and have previously conceded the central bank is at risk of missing next year`s goal after turmoil in the oil market and the ruble.
20.04.2016 14:46 How long can a strong US economy last?
The US economy has built itself back up since the financial crisis. But can its foundations support the success? Economists are concerned about a number of structural problems. Despite positive figures, experts from leading US think tanks are exercising caution when speaking about the state of the country`s economy. "It`s better than so-so," one commented. "Modest is the word that I would use." The US is "doing about as well as we would hope,” another said. A third saw “the glass as half full - or half empty." At around five percent, the US unemployment rate is almost back to where it was before the global financial crisis struck in 2008. Nevertheless, "finding a job is still pretty difficult for someone who didn`t graduate from high school," says Mark Calabria from the Cato Institute, a libertarian think tank. Plus, the unemployment rate masks the rise of underemployment, as companies offer more workers less work. "If you`ve got one person working 40 hours a week versus two people each working 20 hours a week, you`ve got two jobs but still 40 hours per week of work," Calabria said. But this is just one of the many problems that qualify recent reports of the US economy`s success.
18.04.2016 11:47 Russian Economy Struggles with Recession as Oil, Sanctions Weigh
The Russian economy contracted sharply last year, as the combination of plunging oil prices, international sanctions and a volatile ruble weighed on country`s prospects. Russia`s gross domestic product (GDP) – the value of all goods and services produced in the economy - contracted 3.7% in 2015. Moscow`s federal budget deficit widened in the first quarter, climbing to 3.7% of GDP, the country`s Finance Ministry reported Friday. As the world`s biggest oil producer, Russia has been hit hard by the oil price collapse that began in mid-2014. While prices have appreciated over 60% since February, the recovery has fallen well short of reversing the fortunes of major energy producers. In 2015, oil and gas represented 43% of Russian state revenues, according to the Ministry of Finance.
16.04.2016 13:54 Japan`s Economic Recovery Is Still Weak, Says BOJ`s Harada
There`s no denying that Japan`s economic recovery is weak and prices don`t seem to be rising, central bank board member Yutaka Harada said. The downbeat assessment from Harada, an academic economist who joined the policy board about a year ago, comes after the International Monetary Fund slashed its forecasts for Japanese growth for this year and next. The IMF predicts an economic contraction next year if Japan goes ahead with a planned sales-tax hike. Meanwhile, the BOJ`s main price gauge has been stuck around zero since mid-2015, even with massive monetary stimulus aimed at stoking inflation. "I am not denying that the economic recovery is still weak,” Harada said in a speech in Shimonoseki, in western Japan. "That is why the bank, after the introduction of QQE, has been enhancing its monetary easing by expanding QQE and by introducing QQE with a negative interest rate." At a press conference, Harada was asked if an expansion of the negative rate was possible at this month`s meeting. "You can`t say it`s impossible," he replied.
14.04.2016 11:24 IMF cuts eurozone growth forecast amid `major` challenges
The IMF cut its growth forecasts for the eurozone this week as the refugee crisis, terrorism and the threat of Britain choosing to exit the EU weighed on the outlook. Europe has never quite emerged from the debilitating debt crisis that erupted in 2010 in Greece before spreading across the eurozone, requiring massive German-led bailouts and sparking acrimony that nearly saw the single currency area implode. While predicting "weak growth", the IMF said deep problems endured in the eurozone, with unemployment still high and crucial reforms still not done in many of the bloc`s 19 member nations. The IMF said the eurozone should grow a modest 1.5 percent this year, down from the 1.7 percent estimated in January and slower than the 1.6 percent seen in 2015. Next year, the eurozone economy would likely expand 1.6 percent, down from the earlier forecast of 1.7 percent. Adding onto the "Brexit" danger, "is the tragedy of large scale refugee inflows, especially from the Middle East", said Maurice Obstfeld, the IMF`s chief economist. "The result could be a turn to toward more nationalistic policies, including protectionist ones," he warned.
12.04.2016 13:30 Russia Finance Minister: Deficit to Hold at 3% of GDP If Oil at $40 a Barrel
Russia`s budget deficit will hold at 3% of gross domestic product if oil prices remain at $40 a barrel, the country`s finance minister said Tuesday. Speaking at a Moscow Exchange forum, Anton Siluanov said the deficit would increase to about 4% of GDP if oil falls to around $33 a barrel. This year, oil prices are likely to average below $40 a barrel in the first six months of 2016, before recovering to $ 50 by the end of the year, Mr. Novak sad. Russia had become accustomed to oil prices of above $100 a barrel and is now trying to adjust its budget and economy to the lower prices. Russia`s economy is able to grow with a modest oil price of $30 or $40 per barrel but, without structural reforms, even a rise to $100 would not lead to rapid growth, senior officials said. Speaking at an economic forum, Deputy Prime Minister Arkady Dvorkovich said that although official forecasts predict an economic contraction in 2016, growth in the world`s biggest oil producer was possible. "We can grow at $30, $40 or $50 (per barrel)," Dvorkovich said. "Here there is no contraction with official forecasts, it`s a matter of scenarios." He said that whether growth could be achieved "depends almost entirely on ourselves, on our own efforts".
11.04.2016 13:34 Ukraine`s economy in 2016: a fragile recovery or collapse?
Ukraine shaken by political scandals, and Prime Minister Arseniy Yatsenyuk at the weekend announced his resignation. Political instability may lead to the fact that the country`s economy continues to be in poor condition. However, these recent forecasts made by leading domestic and international analysts still quite optimistic and give hope to the very fragile recovery in 2016. The World Bank kept its forecast for Ukraine`s 2016 economic growth unchanged at 1 percent and said it saw inflation slowing to 15 percent this year, compared with a previous forecast of 23.4 percent. The results of a Reuters poll of 16 Ukrainian banks and brokerages forecast Ukraine`s economy would grow 1.4 percent in 2016 after contracting 9.9 percent in 2015 and 6.6 percent in 2014.
08.04.2016 12:15 Study: Climate change could cost world economy as much as $24 trillion
As much as $24 trillion of the world`s financial assets could be hit by rising temperatures and extreme weather events, according to one of the first studies using an economic model to calculate the cost of climate change. Fossil-fuel and other assets risk losing more of their market value from the impact of severe climate change than from tighter environmental regulation, according to the report by researchers from the London School of Economics, published Monday, April 4 in the journal Nature Climate Change. The figures were derived from models that estimate the impact of climate change on gross domestic product growth and calculate the possible damage to companies` assets.
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