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24.03.2015 14:14 OECD Raises Economic Growth Forecasts on Lower Oil Prices

The outlook for the world economy has improved in the early months of 2015 as a result of lower oil prices and the provision of additional stimulus by several central banks, the Organization for Economic Cooperation and Development said. But the Paris-based research body warned an over-reliance on monetary policy to support growth holds dangers for the stability of the financial system, including excessive risk taking and borrowing, and foreign-exchange rates that don`t reflect underlying economic circumstances. The OECD said the U.S. dollar`s appreciation against other major currencies is contributing to low inflation in the world`s largest economy and could weaken growth by damping exports. It therefore expects the U.S. Federal Reserve to delay its first rise in interest rates, which many economists have been expecting to take place in June, until there are signs that Europe`s economies are strengthening, and the euro is set to appreciate. The question about when the Fed is going to move off of zero depends a lot on whether Europe rebounds, said Catherine Mann, the OECD`s chief economist, in an interview with The Wall Street Journal. In the first update to its projections in 2015, the OECD said it now expects the economies for which it provides forecasts - which account for 70% of global output - to grow by 4% this year and 4.3% next. In November, it forecast growth rates of 3.9% and 4.1% for those years.

23.03.2015 13:18 Global GDP growth forecasts for 2015 downgraded Fitch

Fitch Ratings on Tuesday cut its global GDP growth forecasts for this year, as emerging market economies will slow more than expected, dragging down the overall pace of growth. According to the rating agency`s quarterly Global Economic Outlook, world GDP will expand 2.7% this year, down by 0.2 percentage points when compared to the previous forecast, released in December. Still, growth will be faster than the 2.5% seen last year. As for 2016, the prediction remained intact, anticipating a 3.0% upturn. It forecasts the Emerging markets` GDP growth, which peaked at 6.9% in 2010, to slow to 3.6% in 2015, before edging up to 4.2% in 2016. The agency said that China`s gradual slowdown is "structural" as reforms take effect, but left its growth forecasts unchanged at 6.8% in 2015 and 6.5% in 2016. India is the only BRIC nation in which growth will accelerate - to 8% in 2015 and 8.3% in 2016 - however, based on updated national accounts data. For the US economy, Fitch maintained its forecast of robust GDP growth of 3.1% in 2015 and 3% in 2016. Shifting focus to Europe, the agency upwardly revised its growth estimates for both 2015 and 2016 by 0.3 and 0.2 percentage points to 1.4% and 1.7%, respectively. Nevertheless, growth will remain modest, it warned. Among other nations, Japan is forecast to return to above-trend growth of 1.3% in 2015 and 1.5% in 2016, supported by currency depreciation and higher real wages after an unexpectedly weak 2014. Growth will remain robust in the UK, as GDP is forecast to grow by 2.5% in 2015 and 2.3% in 2016 following 2.6% in 2014.

22.03.2015 13:22 Russia Declares Worst Is Over as Economy Adapts to Sanctions

The worst is over for Russia`s economy after a tailspin in oil prices and sanctions over Ukraine sparked the biggest currency crisis since 1998, putting the nation on the brink of its first recession in six years, according to Finance Minister Anton Siluanov. The negative peak is behind us and instead we are seeing certain signs of stabilization, Siluanov said in Moscow Thursday at a conference organized by the Russian Union of Industrialists and Entrepreneurs, the nation`s big-business lobby. The situation in the financial sector is also stabilizing. We see rising returns on debt markets, and the financial market is showing momentum toward growth. Reeling from a plunge in the ruble and economic punishment over Ukraine, Russia is just entering a recession that`s ravaging industries from carmaking to banking. As weekly inflation started to stabilize, the central bank has embarked on an easing cycle and focused more on jumpstarting growth. While the financial turmoil wanes and the economy bottoms out, the slump is still rippling through consumer demand and inflation remains at 16.7 percent, the fastest since 2002. Russia is on track for the biggest drop in consumption in more than two decades, with the central bank predicting the economy may shrink as much as 4 percent this year.

21.03.2015 14:02 Why The Russian Ruble Is Stabilizing

The Russian ruble stabilized in recent weeks as the pace of inflation slowed, alongside steadying government benchmark rates. Since July, the U.S. dollar appreciated against the ruble by nearly 80%, but the pair has traded sideways the last few months, seen below. Steadying benchmark rates have led to inflows in the ruble. In March, the benchmark lending rate was set at 14%, down 100 basis-points from 15%, and in line with estimates for 14%. Over the last year, the benchmark rate has been increased to as high as 17%, from lows below 6%, and now to current levels. Even though the outlook for the Russian economy is not optimistic, it is relatively more optimistic than at points during the end of 2014. The Central Bank of Russia has conceded that inflation will remain high, and its economy will grow slower, but further large devaluations in its currency look to be over, for now. Russia`s economy is not strong, but is improving, and looks ready to embrace the weakness that lies ahead due to sanctions from the West, the low price of oil, and a war with Ukraine. Investors too have priced in expectations for the future of Russia, leading to a stabilizing currency. Expect the ruble to trade sideways in coming months against most currencies, even advancing against currencies that are easing policy, such as the euro.

20.03.2015 20:48 Green Earth: For The First Time In 40 Years, World Economy Continued To Grow, But Carbon Emissions Didn`t Climb

This year has been a historic year for our planet. While the world economy has continued to grow, the CO2 emissions haven`t climbed. We haven`t been able to pull off this feat for the last 40-odd years. A recently compiled report has indicated that, while the global economy continued its unabated march owing to relatively peaceful times, our collective carbon emissions or as it is commonly referred to as carbon footprint hasn`t become larger. The group behind the report the International Energy Agency (IEA) feels it is due to the considerable growth in deployment of renewable energy facilities by some of the biggest countries and their governments. As the dominant species of the earth, we still put out 32.3 billion tons of carbon into the atmosphere last year. While this may be a deeply concern-worthy figure, we can take solace in the fact that this was the almost the same amount we spewed into our environment in 2013. Meanwhile, the global economy grew about 3 percent.

19.03.2015 10:43 Russian Economy Shrank 0.7% in First Quarter, Central Bank Says

Russia`s economy shrank 0.7% on the year in the first quarter, Russian news agencies reported Monday, citing the central bank`s first deputy chairwoman, Ksenia Yudaeva. However, the Bank of Russia said on its website that its models paint a more optimistic economic outlook than the majority of official forecasts. According to its latest economic outlook, growth could reach 0.6% on the year in the second quarter. The central bank`s second-quarter forecast contrasts with its own forecast for the whole of 2015, for a gross domestic product contraction of up to 4%. Market economists and credit-rating firms expect the economy to contract by more than 5% this year, due to a sharp drop in oil prices and Western sanctions against Moscow. The central bank noted that its outlook for the second quarter could be revised lower as more official economic data is published. Russia`s Central Bank expects the country`s GDP recovery growth at 5.5-6.3% in 2017, the regulator said in its monetary policy report. In its previous forecast, the Russian Central Bank expected the domestic economy to expand by 0.8% in 2017.

18.03.2015 14:12 Russia cuts interest rate to 14% amid fears over economy

The Russian central bank has cut interest rates by one percentage point, sending a strong signal that it sees the rapidly declining economy as a more serious worry than high inflation. The bank cut its main interest rate to 14%, continuing an easing cycle that began in January when it unexpectedly cut the rate by two points. This time economists had broadly expected Friday`s move as the downturn gains pace due to the low international price of oil, Russia`s main export, and western sanctions imposed over Moscow`s role in the Ukraine conflict. The rouble has stabilized since a panicky collapse late last year, giving the bank breathing room to continue easing. However, the bank signaled that it is preparing for a worsening economy if the oil price fails to maintain a recent recovery. A central bank monetary policy document published on Friday said the economy could contract by up to 5.8% this year in a risk scenario based on oil prices averaging $40-$45 per barrel.

16.03.2015 14:49 Russian economy is ready to grow

After a year of sanctions and a contraction, the Russian economy is ready for the upside. What it needs are economic reforms and international integration not further sanctions and geopolitical isolation. While the political impact of the opposition leader Boris Nemtsov`s killing has been limited in Russia, it has fueled demands for new sanctions against Moscow in the West. Meanwhile, Russian equity valuations suggest potential for a strong performance over the coming months. Nevertheless, as long as sanctions prevail, the potential destabilization in the Russian economy and severe collateral damage in Europe will steadily increase.

15.03.2015 13:41 Russian economy could shrink by 5.8 percent in 2015

The Russian economy could contract by up to 5.8 percent this year in a "risk scenario" based on oil prices averaging around $40-$45 per barrel, a central bank said. Russia`s economy has slowed sharply in recent months as a collapse in oil prices and Western sanctions over the Ukraine crisis have dragged on growth. The central bank sees gross domestic product contracting by 3.5-4.0 percent in 2015 in its "base case", which assumes oil prices averaging $50-55 per barrel. The bank sees the average price of Urals crude oil URL-E, Russia`s main export blend, rising to $60-65 in 2016 and $70-75 a barrel in 2017, under this base scenario. Under these assumptions, it forecasts a 1.0-1.6 percent economic contraction in 2016 followed by a 5.5-6.3 percent rebound in gross domestic product in 2017. The quarterly monetary policy document, which includes the bank`s latest macroeconomic forecasts, also showed the bank foresees its foreign currency reserves shrinking by $50 billion in 2015 but staying constant in 2016 in its most likely scenario. The bank also expects the reserves to recover by $36 billion in 2017. It saw Russia`s current account surplus at $64 billion this year, rising to $90 billion in 2016 and $119 billion in 2017.

13.03.2015 23:38 Russia`s GDP cheer may not last

Decent macro results in January may have showcased Russia`s economic flexibility, but it might be a false dawn. A respectable economic thinktank predicts a turn for the worse, and some preliminary February numbers already point to a deteriorating budget situation. The Russian economy did pretty well in January. Official statistics from the economy ministry show that GDP was down a modest 1.5% year-on-year (minus 1.1% y/y adjusted for fewer working days). Industrial output was up 0.9% y/y with a number of industries showing double-digit growth, offsetting double-digit declines in some others. There is evidence that the rouble devaluation is helping commodity exporters, while import substitution has had a visibly positive impact on, among others, food producers (benefiting from sanction-related import bans) and pipe manufacturers (offsetting a sharp drop of imports from Ukraine). At the same time, investments were sharply down ( minus 6.3% y/y) as well as retail trade (minus 4.4% y/y). Real disposable income shrank 0.8% y/y in January after a 6.2% drop in December. The release of January stats coincided with the publication of a 2015 forecast from the Gaidar institute for economic policy, an independent economic thinktank. It argues that the economic contraction in 2015 will be sharper than forecast by the Russian government, because of a deeper cut in investments and a steeper fall in disposable income.


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