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24.12.2015 16:20 Global Economy to More than Double by 2040

The global economy will grow an average of 3.5 percent per year and will be more than double its current size by 2040, OPEC said in its World Oil Outlook report released on Wednesday. "Driven by demographic and productivity trends, world Gross Domestic Product (GDP) growth is estimated to average 3.5% [per annum] for the period 20142040. As a result, the world economy in 2040 will be 244% of that in 2014. Developing countries will account for three-quarters of the growth averaging 4.6% p.a. for the forecast period. China and India alone will account for half of this growth," the report reads. Though China`s gross domestic product will grow 120 percent in the next 25 years, the per capita GDP throughout the world will not change dramatically, OPEC said. "Contrary to a ranking of regions based on GDP size, the ranking on a per capita basis will not change dramatically. OECD America will continue to have the highest GDP per capita of all regions followed by OECD Asia Oceania and OECD Europe. As income per head in China and India will almost triple, these countries will move up in the rankings. However, the figures also underscore the unequal distribution of wealth in the world. While in 2014 the ratio between income per capita in the poorest region (Middle East & Africa) and the richest region (OECD America) was 9.8, in 2040 it is expected to increase to 11.5," the report reads.

23.12.2015 20:33 How much are Western sanctions hurting Russia`s economy?

Sanctions imposed by Western nations on Russia over its involvement in the Ukraine crisis and absorption of Crimea have hurt the country`s economy, but not mortally wounded it. The collapse of oil prices and the subsequent devaluation of the ruble have done far more damage. But faced with this double whammy, the Kremlin is in crisis mode and trying to stitch together a rescue package. In the long run, the current squeeze may end up being a boon for Russian companies, as firms used to easy profits have been forced to cut costs and improve really bad management practices. The sanctions imposed last year were largely symbolic, with the notable exceptions of the ban on offering Russian companies anything more than 30 days` credits, and the list barring Western firms from doing business with some of the largest corporate and financial institutions in the country. As a result, the banking sector is bearing most of the brunt of the move. In the old days, our business was easy, said one senior banker who didn`t want to named. We borrowed long, cheap money from the international markets and lent it short and expensive on the domestic market.

22.12.2015 14:55 Is Russia still a key world power?

Whether Russia, one of 15 successor states to the USSR, which broke up in 1991, is still a genuine world power in 2015 is open to question. It remains the world`s largest country and the largest oil producer. It retains its permanent seat on the UN Security Council (one among five). Its nuclear arsenal (in Cold War times one of five countries, but now one of nine) has been progressively modernized. Sustained increases in defense spending have brought it close to its goal of escalation dominance in local and regional war. But the economic base for these capabilities is steadily declining. Russia`s economy is the 10th largest in the world, producing little of value beyond hydrocarbons. Corruption and rent-seeking extract an enormous economic toll. It remains burdened with Soviet era infrastructure, and its ability to meet the educational and medical needs of its population is rapidly declining.

21.12.2015 14:32 The World Bank updated its economic outlook for Russia for 2015-2017

The World Bank has updated its economic outlook for Russia for 2015-2017 to reflect a recent downward adjustment in oil prices. The new most likely scenario assumes an average oil price of US$51.9 per barrel for 2015 and of US$49.4 per barrel for 2016 from previously projected US$53.0 per barrel in 2015 and 2016. The assumed lower oil prices are expected to have no impact on growth in the last quarter of 2015. On this basis, the World Bank keeps its 2015 projections of a 3.8 percent real GDP contraction by this year. Growth for 2016 was revised slightly down to -0.7 percent (from -0.6 percent). The revised forecast is largely driven by the recent downward adjustment in oil prices that is expected to keep pressure on the ruble exchange rate, somewhat delaying the retreat of inflation in 2016, said Birgit Hansl, World Bank Lead Economist for the Russian Federation. Elevated inflation risk could further delay the Central Bank of Russia from resuming its monetary easing cycle. Higher borrowing costs than anticipated in the previous forecast could then limit credits to firms and households.

18.12.2015 21:14 What awaits Russia`s economy in 2016 - collapse or recovery?

The collapse of oil prices in December has divided officials and analysts into pessimists and optimists, with Russian Finance Minister Anton Siluanov predicting on Dec. 12 that the price of oil in 2016 will fall below $30 per barrel in some periods, according to the TASS news agency. According to Siluanov, demand and the price of oil will continue to decline over the next year and Russia needs to start preparing for the worst. We need to draw up backup plans now on what would happen if the prices will fall further, said Siluanov, recalling that the 2016 budget is based on a price of $50 per barrel, while the macroeconomic situation is currently showing no signs of changing for the better. An oil price of below $40 is considered a risk scenario in the government`s macroeconomic development plan for 2016. In this case, the economy will lose another 2-3 percent, the investment slowdown will continue, and inflation will fall to 7 percent by the end of 2016. According to Central Bank head Elvira Nabiullina, the relevance of this scenario has recently increased.

16.12.2015 13:54 Russia is bracing for $30 oil in 2016

Russia is planning for oil prices to drop to $30 per barrel in 2016. The country`s top finance official, Anton Siluanov, said the government must be prepared for prices to fall further in 2016 as the global glut grows and new supply -- for example from Iran -- enters the market. "Everything indicates that low oil prices are likely to dominate next year. And it is possible that at some periods the oil price will be $30 per barrel," Siluanov was quoted as saying by Russian state-run news agencies. That would spell more pain for Russia. Oil and gas exports make up almost half of government revenue. Oil futures were trading at their lowest level in nearly seven years on Monday, sliding below $35 per barrel. Russia is planning for oil to trade between $40 and $60 per barrel over the next seven years. Its 2016 budget is based on an oil price of $50 per barrel, Siluanov said. "Therefore, we must be prepared for difficult times," he was quoted as saying.

14.12.2015 13:48 Will Russia`s economic restrictions on Turkey backfire?

Turkey`s downing of a Russian jet in November tanked the phenomenally growing economic relations between the two countries. Following the incident, Russia announced economic sanctions banning imports from Turkey of fresh fruit, vegetables, poultry, salt and cloves beginning Jan. 1. Russia`s reactions have not been confined to economic sanctions. Almost immediately, Turkish businessmen visiting Russia were detained, restrictions were imposed on Turkish workers and visa-free visits to Russia will end Jan. 1. Russia officially called on its citizens not to go to Turkey, canceled charter flights, excluded Turkish companies from tenders and terminated military cooperation between the two countries. Apparently these serious measures were not enough to soothe the Russian administration`s anger. "Those who committed this treachery will get the punishment they deserve," Russian air force Cmdr. Viktor Bondarev said at the funeral of the Russian pilot killed over Turkey.

12.12.2015 16:05 UN: World Economy Stumbled in 2015, With 2.4 Percent Growth

The world economy stumbled in 2015, with growth estimated at just 2.4 percent this year following a nearly 60 percent drop in oil prices and an over 20 percent fall in commodity prices in the last 18 months, according to a U.N. report released Thursday. The report on the World Economic Situation and Prospects 2016 said many developing and former Soviet bloc countries suffered a broad slowdown to the weakest pace since the global financial crisis in 2008. The growth rate compares to 2.6 percent in 2014. "Weak global growth continues to hurt labor markets," U.N. Assistant Secretary-General for Economic Development Lenni Montiel said at a news conference. "Unemployment is on the rise in some regions, or remains stubbornly high in some countries. At the same time, job insecurity is becoming more entrenched amid the shift from salaried work to self-employment." One of the striking features is a sharp decline in investment across a large set of countries, said Hamid Rashid, chief of the Global Economic Monitoring Unit at the U.N. Department of Economic and Social Affairs. All but five of the 20 largest developing countries observed a decline in investment over the last 18 months, he said.

09.12.2015 20:18 Russian economy moves out of recession

In the wake of sharply declining oil prices, a ruble that almost halved in value and the imposition of economic sanctions, many believed 2015 would witness a default in Russia like that of 1998, with banks collapsing, inflation going through the roof and ordinary people facing catastrophe. Those fears were not realized. Russia`s economy took a battering and real incomes were bruised this year, but as 2016 comes into sight, the economy has started to slowly pick up again. Quarterly evaluations show that the recession, as it is defined, is over, Alexei Ulyukayev, Russia`s Minister of Economic Development, said at a meeting with European diplomats in Moscow last month. Foreign experts echoed his statement: the credit rating agency Standard and Poor`s reported 0.5 percent growth in the third quarter after almost four quarters of decline, and predicted that growth would continue. But Russian analysts remain cautious, warning that the crisis is not over yet and that there`s a long road ahead for the economy to get back to where it was in the late 2000s.

07.12.2015 20:33 OPEC Unshackled From Quota Could Add Millions of Barrels

OPEC`s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. Everyone does whatever they want now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It`s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya. It means more OPEC oil next year, Jamie Webster, a Washington-based oil analyst for IHS Inc., said of the organization`s Dec. 4 decision. OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production. Oil slumped 2.7 percent in New York on Friday after OPEC ended its meeting without specifying a new production quota, saying instead that it would keep output near current levels of 31.5 million barrels a day. Crude prices extended losses on Monday to a three-month low of $38.49 a barrel.


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