The Lastest Macroeconomic News
28.03.2015 12:24 Russian Inflation: Worse Than Almost Everywhere In Eastern Europe
Rosstat released a surprisingly large batch of statistics the other day. There was a lot of useful information, but the most interesting and pertinent was a comparison of Russian inflation since December of last year with inflation in a wide range of other economies. It`s not exactly shocking, or at least it shouldn`t be, but no matter what criteria you use Russia`s performance was terrible. Over the course of the past several months, the only country in Europe, and one of a small handful of countries anywhere in the world, in which consumer prices grew more quickly was Ukraine. Even countries that have traditionally been monetary basket cases, like Kyrgyzstan, have current levels of inflation that are substantially below Russia`s. All across Europe, there are massive disinflationary pressures. Largely influenced by a collapse in the price of oil, consumer prices fell not only in the fully developed Western markets, but even in post-communist transition countries like Poland.
27.03.2015 12:14 Russia`s economy in 2015 - more resilience than expected
How is Russia`s economy doing right now? Pretty clearly, the answer is “not very well.” 2014 was the first year since Putin came to power in which, due to a combination of spiking inflation, plummeting oil prices and flat-lining growth, the average real disposable income actually shrank. The economy still managed to eke out 0.6% overall growth, but no one, not even the Kremlin, could dispute the blackening outlook and the general sense of malaise. There is a universal consensus that 2015 will be worse. But exactly how much worse? Here the answer is not at all clear. Anders Aslund was a particularly high profile member of what can be called the "disaster caucus", the people who think that Russia`s economy is headed for implosion. He predicted that 2015 would see a recession that would lop off somewhere between 8% and 10% of total output, substantially worse than the crisis year of 2009. Needless to say, Aslund`s forecasts seems unduly pessimistic. Yes the current mood is grim, but it`s nothing like the blind panic which was gripping the world financial system in the aftermath of the collapse of Lehman Brothers. In contrast, Russia`s current crisis has been a slow-motion one. Things haven`t happened all at once, it`s been a slow drop of bad news over the course of a year. Market participants are all too aware of what is likely to happen. That will likely make resolution of the crisis more difficult (it seems a virtual certainty that the current recession will be more protracted than 2009`s) but it also means that panicked uncertainty, which was a hallmark of 2009, is absent. Outside of the Russian finance ministry, which predicts a modest recession in 2015 and a return to 2-2.5% growth as soon as 2016, other estimates broadly expect a contraction of somewhere between 4% and 6%. The latter figure is the position of market economists and credit ratings firms, while the slightly more optimistic figure is the product of the Central Bank of Russia (which estimates that the economy will shrink by 0.7% over the first quarter of this year).
26.03.2015 14:34 Russian economy revives despite sanctions
The Russian economy has seen a notable rebound with businesses recovering despite a year of contraction caused by Western sanctions. Fluctuations in the domestic currency have narrowed, which brought investors back into the market. Global investors appear to be optimistic about the future of Russian corporations, as the country`s economic performance provides evidence to recovery, says Bloomberg analyst Matthew Winkler in his article. Those who invested in ruble-denominated government securities this year have already made a profit equivalent to seven percent in dollar terms, while those who invested in government bonds of other developing countries lost more than one percent from January, he says. The holders of corporate bonds gained even more with a 7.3 percent return in 2015, which leads the index for emerging market corporate bonds compiled by Bloomberg. The 50 Russian stocks in the MICEX are up 11.9 percent this year, which is better than any North American market, and that, according to analysts, shows confidence is starting to return. Russian companies were more profitable measured by their Ebitda margins (earnings before taxes, depreciation and amortization) than the rest of the global MSCI Emerging Market Index. Around 78 percent of enterprises represented in the MICEX index showed a greater increase in sales than their counterparts around the world. For instance, Novatek OAO, a $22.8 billion independent producer of natural gas in western Siberia, saw its sales increase 19.5 percent, compared with 0.76 percent from the sector globally. Oil major Rosneft with a capitalization of $41 billion and production in western Siberia, Sakhalin, the North Caucasus and the Arctic, reported an 18.26 percent annual sales growth, while its international competitors having shown an increase in revenue of just 0.76 percent. However, the pace of economic recovery strongly depends on investment demand, according to Russian Finance Minister Anton Siluanov. The finance ministry estimates the country`s GDP will fall by roughly three percent in 2015.
25.03.2015 15:34 Why Russia`s Economic Slump Has Been Good For London
One year ago, the U.S. and Europe started imposing sanctions against Russia to punish it for seizing part of Ukraine. At the time, many British analysts feared the sanctions would hurt London, because of England`s close economic ties to Russia. A year later, with Russia`s economy in recession, London is thriving. And this may not be despite the crisis in Russia; London may be doing well partly because of Moscow`s economic turmoil. "There is a paradox, if you like, that the worse the ruble gets, the worse the Moscow market looks, the more attractive London appears," says Yolande Barnes, director of world research at Savills, a real estate company. "The attraction for Russians, therefore, is the underlying stability, transparency and ease of doing business" in the U.K. But in March 2014, hand-wringing as the sanctions took effect was widespread. "The true cost of sanctions, if Russia is hit hard, could hurt the U.K. much more than people think," said analyst Joshua Raymond on the British financial news website Cityindex. "These sanctions are possible, but they`re going to hurt us more than they hurt them," an analyst named Ruben Lee told the BBC`s Today program. Those assessments were pretty typical of the news coverage at the time. Now, the ruble has lost about half its value from a year ago. And in London? "The U.K. saw its fastest growth since the financial crisis last year, and we think that momentum is going to be more or less maintained in 2015," says economist Scott Corfe of the Centre for Economics and Business Research. "Unemployment has been falling rapidly," Corfe says. "So I think overall it`s a pretty positive picture for the U.K."
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.
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