The Lastest Macroeconomic News

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.

07.04.2016 11:50 Impact of China on advanced economies set to grow

Emerging markets such as China pose a growing risk to advanced economies with events in developing economies increasingly responsible for price movements in financial markets in richer countries, the International Monetary Fund has warned. Moreover, markets were only just beginning to feel what was likely to be the growing impact of China in the years to come as its financial links with the rest of the global economy increase, IMF economists said on Monday. It is likely that China`s spillovers to global financial markets will increase considerably in the next few years, they said in a chapter of the upcoming Global Financial Stability Report released ahead of next week`s spring meetings of the IMF and World Bank. The fund`s warning comes amid continuing concerns about the slowing growth in China and its leadership`s efforts to shift the economy from one driven by manufacturing exports and investment to one more reliant on domestic consumption. It also comes as central banks in advanced economies such as the US Federal Reserve are increasingly factoring in what is happening in emerging markets such as China into their own policy calculations.

05.04.2016 15:11 Oil, taxes and big problems for Russia`s economy

Things are getting bad in Russia - so bad that the country is weighing sacrificing its future in order to survive its present. A conflict is simmering in Russia as the country`s Finance Ministry pushes for increased taxation of the country`s oil industry in order to support its budget. A contracting economy and a persistently low oil price have severely hurt the country`s budget, so officials are seeking to draw more revenue from domestic energy companies - instead of severely cutting costs, which Moscow fears could bring dire political consequences. This plan likely makes short-term sense to the Kremlin, but it could cripple the oil industry - and by extension Russia`s long-term growth prospects - for years to come, experts told CNBC. "This would have decadeslong effects," Lauren Goodrich, a senior Eurasia analyst at geopolitical intelligence firm Stratfor, said of a strong tax on the oil industry. If Russia`s energy resources don`t see new investments in the next two years, she said, then the country could experience lengthy declines in oil production - old Soviet-era wells drying up, without new ones coming on.

03.04.2016 14:13 Economic Development Ministry sees upward trend for Russian economy

In a new economic outlook for 2016-2018, the Russian Economic Development Ministry says recession this year wont be as significant, as previously forecast. The economy is due to return to growth in 2017, provided the oil price is above $45 a barrel. Previously, the ministry expected Russian GDP to contract 0.8 percent this year. In the improved forecast, it will contract 0.3 percent, according to the report, obtained by Vedomosti business daily. Inflation in 2016 is expected to hit seven percent, compared to the 8.5 percent forecast. In the next two years inflation is projected to go down to 5.5 and 5.2 percent, respectively. The Ministry of Economic Development also expects a gradual increase in oil prices - from $40 per barrel this year to $50 in 2018 and 2019. Estimates on capital outflow from Russia have also been reassessed. The ministry expects that $40 billion will leave the country this year instead of $50 billion. In the best-case scenario this number will fall to $25 billion by 2018. Real wages are due to contract 2.9 percent this year and return to growth in 2017. The ruble is forecast to gradually grow against the US dollar, trading at 57.1 to the greenback in 2018.

01.04.2016 19:36 Russian Economy Shrank Less Than Forecast, Enduring Crash in Oil

Russia`s economy shrank less than forecast in the fourth quarter, using a flexible exchange rate to ride out the collapse in oil prices. Gross domestic product fell 3.8 percent from a year earlier after a revised 3.7 percent drop in the previous three months, the Federal Statistics Service said Friday. The median estimate of 13 analysts surveyed by Bloomberg was for a 3.9 percent decline. Contractions in the first and second quarters of 2015 were revised to 2.8 percent and 4.5 percent from 2.2 percent and 4.6 percent, leaving the full-year decline unchanged at 3.7 percent. There`s evidence that the economy is going through a continuous adjustment to "the new normal": the low oil price, a free-floating ruble and geopolitical uncertainty fed by sanctions, Vladimir Miklashevsky, a strategist at Danske Bank in Helsinki, said before the data release.

31.03.2016 13:07 Russian Economic Crisis Risks Stagnation, Degradation

The Russian economy is locked in an especially bad crisis. It differs significantly from the crises of 1998 and 2008-2009, when rapid downturns were followed by equally rapid recoveries. If anything, the current crisis more closely resembles that of the early 1990s, when Russia was transitioning from a planned to a market economy. Although salaries fell further then - by more than 50 percent - the same institutional problems caused both crises. The norms and rules now in place in the Russian economy are blocking its further development, just as they did back then. Budgets are in the worst condition. The federal budget deficit for 2015 totaled 2 trillion rubles ($32.8 billion) or 2.5 percent of gross domestic product. The combined deficit for all regional and municipal budgets totaled 2.7 trillion rubles ($44.3 billion), or 3.5 percent of GDP - 11 percent more than in 2014. Industrial output fell by 5 percent by May 2015. Household personal incomes dropped last year by 4.7 percent (and by 6.9 percent this February when compared to February 2015). Consumption slumped sharply, causing a 10 percent decline in retail sales. Construction was down by 13 percent in September 2015, and by 7 percent for the year overall. Investment continues to fall for the third consecutive year, and each year the rate of decline increases. Last year alone investment dropped by 8.4 percent. That means the crisis is continuing, and even if this or that sector has already "hit bottom," there is no guarantee that investment will not fall even further - because there are no drivers of growth in the Russian economy.

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