The Lastest Macroeconomic News
20.08.2015 18:56 Things in China are about to get better, but for the worst possible reason
Chinese economic data continues to disappoint, and the recent volatility in the country`s stock markets shows no sign of abating. Wall Street`s reaction to this is pretty much unanimous: the government has to take action to stop the bleeding. And that action, the belief goes, will help China`s economic performance turn around in the second half of 2015. The problem is that the measures the politicians will most likely implement will only exacerbate China`s deepest structural economic problems. That means any bubbles in China`s credit and property markets will only get bigger, and the reform required to tilt the economy toward domestic consumption will be further delayed. This is a giant can being kicked down the road. The plan for China`s economy had been to start accepting lower levels of annual growth in what President Xi Jinping called a "new normal" in order to reform sluggish economic sectors and normalize the system. The government was at the same time encouraging investment in the stock market.
18.08.2015 19:14 Big four country boom could add $25 trillion to world economy
An unusual confluence of events in the world`s new effective Big Four economies could add $US18 trillion ($25 trillion) to the size of the world economy by 2020 confounding the current gloomy outlook and pushing oil back above $US100 a barrel. And a potentially stronger than expected recovery in the US, China, Japan and India fuelled even more by their interdependence would have a particularly positive impact on a commodities dependent and food exporting economy like Australia, according to a new study by BNY Mellon investment strategist Simon Cox. Mr Cox, who is talking to investors in Australia this week about a new series of planned contrarian reports on a potential upturn in world growth, says that the existing "glum consensus" in the world gives little weight to to some of the things that have gone right over the past couple of years especially in what he defines as the big four economies. He says Japan has a stable government and a determined central bank, unemployment is dropping surprisingly quickly in the US, China`s president Xi Jinping has consolidated power fast and has staked his personal authority on economic change and in India Narendra Modi is adding reforms to an already changed Indian economy. "This is an unusual confluence of events. The United States is enjoying a durable recovery just as all three of Asia`s big powers boast secure, confident governments committed, at least in word, to economic reform. The region`s stars rarely fall into alignment in this way," he says.
15.08.2015 19:03 Eurozone GDP unexpectedly slowed in second quarter
The eurozone`s economic recovery lost momentum in the second quarter, underscoring the deep-rooted fragility in the region as a cooling Chinese economy and lingering concerns about Greece`s debts cloud its outlook. Gross domestic product growth slowed to 0.3% from 0.4% in the first quarter, missing economists` forecasts of a 0.4% gain, the European Union statistical agency said Friday. That translates to an annualized rate of 1.3%, Eurostat said. The data also highlight the big divergences within the 19 countries sharing the euro, which threaten the region`s prospects for a sustained recovery. Accelerating GDP growth in Germany was offset by weaker growth in Italy and the Netherlands, while the French economy stagnated. German GDP growth quickened to 0.4% from 0.3% in the first quarter, falling short of economists` forecasts of a 0.5% gain. That translates into an annualized rate of 1.8%, according to the country`s statistical agency, Destatis. French GDP was unchanged in the second quarter from the first. That was below forecasts of a 0.2% rise and marked a sharp slowdown from the 0.7% jump in the first quarter. Economic growth in Italy, meanwhile, slowed to a quarterly rate of 0.2% from 0.3% in the first quarter, confirming the recovery in the eurozone`s third-largest economy is still fragile.
12.08.2015 19:34 Kyrgyzstan joins Eurasian Economic Union
Kyrgyzstan has officially become a member of the Eurasian Economic Union (EEU) after passing an accession process by the parliaments of the other members–Russia, Kazakhstan, Belarus and Armenia. "The most important step was the ratification of the Treaty on the Kyrgyzstan Accession to the EEU by the parliaments of the five countries, so all parliaments have expressed their will," Kyrgyz Economy Minister Oleg Pankratov stated on July 9. Pankratov added that there are no substantial barriers to Kyrgyzstan`s accession to the EEU as full member. Currently, according to the procedure of the EEU accession, the ratified documents were signed by the presidents of member states, which would then be sent to the Eurasian Economic Commission depositary. Kyrgyzstan`s membership in the EEU assures deepening integration between Kyrgyzstan and the EEU member states, providing a free movement of goods, services, capital, and labor.
11.08.2015 20:15 India has potential to become multi-trillion dollar economy
India has the potential to become a multi-trillion dollar economy with a per capita income of about $40,000 by 2050 if it manages to grow at seven per cent annually for the next 30-35 years, a top World Bank official has said. "If we can manage to grow at seven per cent for next 35 years, we will not only be the second largest economy in the world at that time but we will be prosperous and people will be rich enough," World Bank Executive Director for Bangladesh, Bhutan, India and Sri Lanka Subhash Chandra Garg said. Addressing the Indian-American community at the Indian Consulate, Garg said India has the potential to become a multi-trillion dollar economy with a per capita income of about $40,000 by 2050 as against the current $2,000 but to achieve that it will have to grow at seven per cent annually for the next 30-35 years. However, he said that achieving and sustaining a seven per cent growth rate for 35 years is "very difficult" and "would require a lot of transformation in the way we manage our economy". He underlined that India will have to transform its agriculture completely, grow its services and manufacturing sectors and give a boost to healthcare and tourism.
08.08.2015 13:06 Industrial Production Slumps in Eurozone`s Engine Room
Industrial production fell in the eurozone`s three largest economies in June, a sign that economic activity in the region failed to gain much momentum in the second quarter. The drop was most severe in Germany, the region`s industrial powerhouse, where output, adjusted for calendar effects and seasonal swings, slumped 1.4% from May, data from the economics ministry showed Friday. Industrial production dropped by 1.1% on the month in Italy and slipped by 0.1% in France, highlighting a diverging trend between the eurozone`s core and its southwestern periphery. Industrial production in Spain, which accounts for roughly one-tenth of eurozone gross domestic product, rose 0.4% in June from the previous month, the INE statistics institute said Friday, another sign that Spain remains one of the fastest-growing economies in the region.
06.08.2015 20:30 Russia expects to see positive growth in economy next year
Russia is expected to see a positive growth of 2.3 percent in its economy next year, said a leading Russian official. The prediction was given by Russian Economic Development Minister Alexei Ulyukayev while addressing a joint meeting of Russian and Belarusian ministries of economic development held at the Belarusian port city of Brest. Ulyukayev made the prediction based on the average oil price standing at 60 U.S. dollars per barrel, according to an online version of his speech posted at the website of the Russian Economic Development Ministry. The Russian official also said the decline of inflation rate indicated improvement in Russian economy. "We think that the inflation rate will range between 10-10.5 percent at the end of this year, and by the end of the first quarter of 2016, according to our forecast and the forecast of the Central Bank, it will be back to 7 percent," said Ulyukayev. The minister was confident that the economic situation in Russia is getting better and the month-on-month recession is almost over. "We estimate that the economic drop would be 3.4 percent in the first half and 4.4 (percent) in the second half of this year," Ulyukayev said. "We assume this is probably the lowest point."
04.08.2015 11:24 Western sanctions are hitting Russia harder than anyone realized
Sanctions linked to the Ukraine crisis could end up costing Russia 9pc of its gross domestic product, the International Monetary Fund has said. Russia`s economy is showing signs of stabilization after slumping under pressure from Western financial sanctions and Russian counter-measures. Low international prices for its oil exports have added to pressure on the rouble and government finances. "The effects of sanctions in terms of external access to financial markets and new investment technology will linger," the fund said, summing up the findings of a mission in May. Last year Western countries imposed restrictions that limit international financing for major Russian banks and energy companies, and also hi-tech exports to the energy sector. Russia retaliated by banning imports of most Western food products. The fund estimated the immediate effect of sanctions and counter-sanctions had been to wipe between 1pc and 1.5pc off GDP, rising to 9pc over the next few years. These model-driven results were subject to significant uncertainty, it cautioned. The IMF also forecast "weak" economic growth of around 1.5pc annually in the medium term. Russia`s economy was growing around 7pc a year before the 2008 global financial crisis.
02.08.2015 11:57 Economic Growth Picks Up With U.S. GDP Gaining 2.3% In Second Quarter 2015
The Bureau of Economic Analysis released its advance estimate of real gross domestic product for the second quarter of this year - covering April, May and June. The release showed output in the U.S. increasing at a rate of 2.3%. This is a major acceleration from the first quarter when real GDP increased 0.6%. “The advance estimate of second quarter GDP confirmed what was broadly expected: the economy bounced back after stumbling out of the gate to start the year,” wrote Jim Baird, chief investment officer for Plante Moran Financial Advisors, in a note on the results. While economists on average were anticipating growth of 2.5% in Q2 Baird recommends focusing on the “solid improvement.” Another positive is the revision to the first quarter GDP reading which now shows expansion rather than a contraction as BEA previously estimated. The second quarter uptick reflects higher rates of personal consumption expenditure, state and local government spending, residential fixed income and more exports. These gains were partially offset by lower federal government spending, private inventory investment and nonresidential fixed investment. Meanwhile imports, which negatively impact GDP, increased.
30.07.2015 12:20 IMF`s Lagarde: World economy is recovering but fragile
International Monetary Fund chief Christine Lagarde says the world economy is recovering but fragile and "faces some downside risks." In an online press conference Wednesday, Lagarde described the United States "a strong performer" and China "resilient" despite a recent drop in Chinese stock prices. She also expressed optimism for the 19 countries that use the euro. The IMF expects the eurozone economy to grow 1.5 percent this year and 1.7 percent in 2016; it expanded just 0.8 percent in 2014. "The euro area is beginning to turn the corner ... We have a more upbeat forecast than we have in a long time," she said. Lagarde called again for Greece`s creditors to reduce its debt burden. She said Greece needs to enact reforms that will make its economy more efficient and expressed confidence the IMF can work with Greece`s left-wing government, which has criticized IMF policies. "There are lots of things that you say (in politics)," she said. "What matters at the end of the day is what you do." Lagarde noted that a drop in worldwide commodity prices is likely to hurt emerging market economies. And the global economy could face fallout if the Federal Reserve raises short-term U.S. interest rates, which it has kept near zero since late 2008.