The Lastest Macroeconomic News
21.03.2016 12:03 Russian central bank holds rates, says tight policy to continue
The Russian central bank left its main lending rate at 11 percent on Friday as expected, but its rhetoric about the need to maintain tight monetary policy was more hawkish than many analysts had expected. Its cautious position underscores the continuing risks facing an economy battered by the precipitous decline in oil prices, although matters appear less bleak than they did at the time of the previous rates meeting in January, when the bank had warned it might need to raise rates to battle inflation. Commenting on the latest rates decision, the bank`s governor Elvira Nabiullina said it was too soon to call the all-clear. "The situation in the Russian economy has improved: inflation has fallen, the economic decline has slowed down, the rouble has strengthened," she said. "However, as before there is high uncertainty about the future dynamics of oil prices and other external conditions. In this situation it would be most correct not to make abrupt moves." Analysts had predicted no change in rates given the bank`s tough anti-inflation rhetoric. But most had also expected the bank to soften its rhetoric by floating the possibility of rate cuts in the near future. That rhetoric remained relatively tough however, giving few grounds to expect imminent rate cuts. "To enable the accomplishment of inflation targets, the Bank of Russia may conduct its moderately tight monetary policy for a more prolonged time than previously planned," it said in a statement.
18.03.2016 10:47 Brazilian GDP contracted 3.8% in 2015, the worst among major economies
Brazil`s GDP fared worse than almost any other major economy in 2015, contracting by 3.8%, according to the national statistics agency IBGE. Economic growth in the world`s seventh-largest economy has fallen sharply in recent months, which was due partly to low commodity prices and sluggish global growth. But political paralysis has hampered Brazil`s efforts to tackle its economic problems, including a budget deficit that has reached 10.8% of GDP. President Dilma Rousseff is trying to head off the opposition`s efforts to impeach her over alleged accounting irregularities, which means she cannot afford to alienate supporters in her Workers` Party by cutting spending or raising taxes. Investigations are also continuing into a high-level bribery and corruption scandal involving major construction projects. Ms Rousseff`s predecessor as president, fellow Workers` Party politician Lula da Silva, is one of the people under investigation. Brazil`s economic performance last year vies with that of Russia as the worst in a major economy for 2015. Official figures for Russia`s GDP last year have not yet been released. For Brazil it was the worst set of figures since 1990.
16.03.2016 11:50 Despite Declining Economy, Russia Shows No Signs of Slowing Military Spending
A stumbling Russian economy does not signal any shift in Kremlin spending less on its military and internal security forces, or the beginning of widespread political upheaval, a leading Moscow economist said. Russia`s economy has been in a downward spiral for years—not just because of falling oil prices and Western sanctions, but because the government itself is increasingly bloated, spending more and more on weaponry rather than stimulating the country`s business sector, Vladislav Inozemtsev, of Moscow`s Higher School of Economics, told a Washington, D.C. think-tank. Speaking at the Center for Strategic and International Studies (CSIS), he said, “The biggest problem for Russia is its own government.” He and other economic forecasters predict that its economy will remain in “a prolonged slowdown” and shrink by at least “2 to 3 percent per year” over the next several years.
14.03.2016 13:07 Inflation in Russia Increases
Inflation in Russia showed a return to the increase in the first week of March, accumulating 0.2 percent of increase of the prices. Between March 1st and 9 the indicator rose 0.2 percentage points, up from 0.1 percent recorded from February 21 to 29, outlined a recent report of the National Committee of Statistics (Rosstat). For six consecutive weeks, until February 21, indicator stood at 0.2 percent of price growth and only between January 1 to 11 - the festive holiday of winter - soared to 0.3 percentage points. Thus, inflation accumulated growth since the beginning of the year to March 9, a 1.8 percent (only 1.6 in December 2015) and eight percentage points in annual terms. According to Rosstat, the algorithm is comparatively lower annual index accumulated in February of a 8.1 percent, up from 16.7 percent registered during the same period from 2015. It also stressed the statistical agency the fact that inflation will be located three points below the basic interest rate of the Banco Central of Russia, equal to 11 percent.
11.03.2016 12:42 Has The Russian Economy Already Passed The Bottom?
At the end of 2015, many high-ranking officials of the Russian government assured us that the country`s economy had already passed the bottom of the economic recession. In order to confirm this, they tend to refer to the positive dynamics of the monthly change in GDP, the rate of employment and corporate earnings growth. However, the analysis of the latest key macroeconomic data do not fundamentally support, strictly speaking, such optimistic projections. Talking about the Russian economy, it is crucial to address the oil issue. I assume that all the latest negotiations on the matter of freezing the level of oil production between Russia and OPEC will be crowned with success. Iran will probably receive preferential treatment within the framework of this agreement and will be able to increase production in certain limits. However, given the record levels of commercial oil stocks in the United States, and the U.S. shale oil producers` statements of readiness to restart active oil production when the price is above $40 a barrel, it is possible to predict that during 2016, the average Brent oil price should not exceed the level of $40. This price level implies a lower export tax burden on the Russian oil sector but inevitably leads to reduction in the revenue part of the budget in 2016.
09.03.2016 14:23 Russian economy likely to remain in recession in 2016 as oil price outlook remains low
Russia`s economic outlook continues to be bleak because of the prospect of continuously low oil prices. Following the drop in commodities prices, with oil prices dropping to the lowest level in over a decade, Brent crude is expected to be within the range of USD 30-40/bbl for the rest of 2016. This will not be enough for Russia`s economic rebound momentum, particularly if both consumer spending and investment are expected to be relatively weak. Russia`s economy contracted 3.7% in 2015. Sharp decline in investment and domestic spending were the main reasons for the recession. Admittedly, final consumption shrank 7.9% y/y as consumer spending declined over 10%. Meanwhile, gross fixed capital formation fell 7.6% y/y and government consumption shrank just 1.8% on back of significant attempts of government to give support to the economy.
07.03.2016 01:17 China cuts 2016 growth target amid continued economy concerns
China has cut its growth target for this year to a range of 6.5% to 7%, down from 7%, a further sign that the world`s second-largest economy is slowing. Premier Li Keqiang said in a speech at the opening of the National People`s Congress parliament, attended by 3,000 delegates, that among the “main development targets” for the nation was “GDP growth 6.5% to 7%”. The goal had been set at “about 7%” for 2015, but expansion came in at 6.9%, it`s lowest for a quarter of a century. China`s leaders have traditionally declared the GDP goal at an easily achieved level that was regularly exceeded, and even then the objective is usually approximated to provide room for positive spin just in case. Using a range, rather than a single figure, will widen the target even further. The downwards revision comes after factory output contracted in China during February.
05.03.2016 12:45 Russia`s Annual Consumer Inflation Slowed to 8.1% in February
Russia`s annual consumer inflation slowed to 8.1% in February, data from the Federal Statistics Service showed Friday. February`s decline in the annual reading, from 9.8% in January, was expected by analysts as the pace of price growth slows due to the base effect. On a monthly basis prices went up by 0.6% in February after growing 1% in the preceding month. The annual inflation in Russia has fallen into single digits in February for the first time since December 2014. In 2015, inflation in Russia reached 12.9 percent — the highest recorded rate since 2008, Rosstat said. The Ministry of Economic Development forecasts that prices in Russia will grow 8.5 percent in 2016. The Central Bank expected that inflation would not exceed 7 percent - with the oil price at $35 per barrel.
03.03.2016 12:26 Russian Government Approves $9B Plan for Battered Economy
The Russian government has approved a 684.8 billion ruble ($9.3 billion) anti-crisis plan as the country`s economy struggles with low oil prices and Western sanctions, and looks set to contract for a second consecutive year. Russian Prime Minister Dmitry Medvedev said Tuesday that he had signed off on the 120-point plan. According to a copy of the plan published online by the Russian government it is designed to “guarantee the stable social and economic development of the Russian Federation in 2016." The Russian economy shrank 3.7 percent in 2015 and rating agency Standard and Poor`s said last week it expected a second year of recession in 2016, with gross domestic product predicted to contract by 1.3 percent. The price of oil, Russia`s chief export and forex earner, collapsed from highs of $115 a barrel in mid-2014 to below $30 a barrel earlier this year. The anti-crisis plan approved by the government comes after weeks of wrangling and is substantially smaller than initial proposals. Russian Economic Development Minister Alexei Ulyukayev told a Feb. 18 cabinet meeting that the anti-crisis plan would cost 880 billion rubles ($11.9 billion).
01.03.2016 14:38 Citi: Risk of global recession rising
The risk of the global economy falling into a recession is rising, as fundamentals remain poor, analysts at Citigroup said. "We are currently in a highly precarious environment for global growth and asset markets after two to three years of relative calm," Citigroup said, noting that global growth was "unusually weak" in the fourth quarter at around 2.0 percent on-year. "The most recent deterioration in the global outlook is due to a moderate worsening in the prospects for the advanced economies, a large increase in the uncertainty about the advanced economies` outlook (notably for the U.S.) and a tightening in financial conditions everywhere," the bank said. At the same time, fundamentals remain poor, including concerns about a structural and cyclical slowdown in China and its "unsustainable" currency regime, excessive leverage and rising regional risks, such as the risk the U.K. may exit the European Union, it said.