The Lastest Macroeconomic News
30.11.2013 14:58 Russian Investment Falls More Than Forecast as Joblessness Rises
Russian investment fell more than economists estimated and unemployment rose to a six-month high as rising incomes helped shield consumer demand in October. Fixed-capital investment shrank for a third month, falling 1.9 percent from a year earlier after a 1.6 percent drop in September, with the jobless rate growing to 5.5 percent, the Federal Statistics Service in Moscow said in an e-mailed statement. Economists forecast unemployment at 5.4 percent and saw a 1 percent contraction in investment, according to the median estimates in two Bloomberg surveys. Retail sales grew 3.5 percent from year earlier as real wages jumped 4.1 percent. Real disposable incomes surged 4.9 percent in October after a revised 0.8 percent decline in the previous month, topping the median estimate of seven economists in a Bloomberg survey was for a 2 percent increase. Growth in retail sales exceeded economist projections both on an annual and monthly basis. Gross domestic product grew less than estimated in the third quarter, expanding 1.2 percent from a year earlier, the same pace as in the previous three months.
29.11.2013 15:33 Russia`s Economy Ministry said that the ruble could depreciate further in 2013
Russia`s Economy Ministry said that the ruble could depreciate further in 2013, weakening the currency to levels not seen for more than four years. The slide has come despite high oil prices and the ongoing tax collection period, which would normally be expected to increase demand for the domestic currency as businesses pay off their dues to the state. Economy Minister Aleksei Ulyukayev admitted there was a small chance the ruble`s fall could gather pace, the Prime news agency reported. The ruble has this week risen 1.4 percent against the euro-dollar basket, the currency benchmark used by the Bank of Russia. Russia is moving toward a free-floating ruble as part of a shift in monetary policy priorities. The Bank of Russia has widened the corridor in which it sells or buys currency six times this month. Bank of Russia deputy chairman Ksenia Yudaeva said that the ruble`s decline has been caused by external factors. But some analysts have linked the fall to a growing lack of trust in Russia`s banking system. Meanwhile, former Finance Minister Alexei Kudrin said that for Russia`s current model of economic growth to work, oil prices need to grow by $20 to $30 annually. But no changes can be expected until the Russian government gets its act together. Alexei Kudrin said the current problems of Russia`s economy are a result of an economic model heavily dependent on oil revenues.
28.11.2013 20:23 Technology Expert Sees Fear of Failure Inhibiting Russian Innovation
Despite its extraordinary scientific capacity, a stated desire to be competitive and the availability of capital, it may take several generations before Russia`s investment in innovation will bear fruit, a report by MIT on the country`s role in global innovation shows. Russia has many of the necessary elements to take its place next to the U.S. and China as one of the great developers of global technologies, said Jason Pontin, editor-in-chief of MIT`s Technology Review, which conducted the research. But there are things that Russia is doing to encourage innovation that are really not best practice, he said in an interview. "I did not know how idiosyncratic Russia`s understanding of the innovation process was," Pontin said. "I admire Medvedev`s commitment to making Russia a technological center of the world. Russia does have the intellectual capacity to do it." But there is an important aspect of corporate governance here that puts Russian technology entrepreneurs at a disadvantage, he added.
26.11.2013 20:23 Economists lowered the forecasts on growth of gross domestic product of the USA in the next two quarters
Economists lowered the forecasts on growth of gross domestic product of the USA in the final quarter of the year and the first three months of 2014 but predicted a slightly higher rate of job growth over the next four quarters. Analysts see the economy growing at an annual rate of 1.8 percent in the current quarter, down from a previous estimate of 2.3 percent, according to the Philadelphia Federal Reserve`s quarterly survey of 42 forecasters. Growth in the first quarter of 2014 was seen picking up to 2.5 percent, though that, too, was down from a prior estimate of 2.7 percent. The economy is expected to grow at a rate of 1.7 percent for all of 2013 and 2.6 percent in 2014. Inflation was expected to remain muted, with year-on-year headline consumer price inflation averaging 1.4 percent in the fourth quarter of 2013 and 2 percent in the fourth quarter of 2014. Those numbers were unchanged from prior estimates. The year-on-year core reading of CPI, which removes food and energy, was also steady at 1.8 percent in 2013 and 2 percent in 2014. On a quarter-on-quarter basis, core CPI was forecast at 1.7 percent in the fourth quarter and 1.9 percent in the first three months of next year. Both were revised down slightly from the previous forecast.
21.11.2013 21:01 OECD sees economic rebound in CEE in 2015
The OECD expects central and eastern Europe`s economies to advance in 2015 after a mixed picture next year as the region tries to overcome the impact of a slump in the euro zone, it said. The organisation urged Slovenia to move quickly to repair bank balance sheets and shore up the sector as the most pressing task to stabilise its economy. The OECD raised Poland`s growth forecasts for this year and next to 1.4 and 2.7 percent from May`s outlook for 0.9 and 2.2 percent, citing rising exports and domestic demand. It saw 2015 growth of 3.3 percent. Slack in the economy will hold inflation pressure down for some time before price increases rise to above 2 percent in 2015. "With diminishing spare capacity, the central bank will need to begin removing monetary stimulus by increasing its policy rate in 2014," it said. As growth pick ups and monetary policy remains fairly accommodative, the government had scope in 2015 to reach medium-term fiscal consolidation objectives faster than planned. The OECD raised its outlook for Hungarian growth to 1.2 percent this year and 2.0 percent next from a previous 0.5 and 1.3 percent. It then sees growth slipping back to 1.7 percent in 2015. It suggested Budapest could foster lending by allowing better bank profitability and cleaning up bank balance sheets. "Since further monetary easing entails risks, notably of currency depreciation, and domestic demand is already picking up, the policy rate should stay on hold for now. As economic slack diminishes and inflation begins to rise, the monetary stance should start to gradually normalise," it said. The OECD cut its Czech GDP forecast to -1.5 percent and 1.1 percent for 2013 and 2014, from a previous -1.0 and 1.3 percent. Growth in 2015 was seen at 2.3 percent. Growth was expected to gather pace in 2014 as fiscal consolidation pauses and external demand accelerates, although unemployment was likely to decrease only marginally. "Positive growth surprises should be used to halt and eventually reverse the rising debt-to-GDP ratio. Monetary policy should remain accommodative as inflation is low and expectations appear well anchored," the OECD said. Slovakia`s growth forecasts were little changed at 0.8 percent this year and 1.9 percent in 2014, from 0.8 and 2.0 percent respectively, before the economy expands 2.9 percent in 2015. Growth will strengthen as improved export markets boost investment and exports, especially in the automotive industry, the OECD said. But joblessness will weigh on private consumption growth, and austerity to cut the budget deficit will damp demand. "Downside risks are related to the uncertainty concerning the euro area crisis and the fragility of the recovery of Slovakia`s main export industries," it said. Slovenia, the euro zone country, grappling with big losses in its largely state-owned banking sector, should see its economy shrink by 2.3 percent this year and 0.9 percent next year before swinging back to 0.6 percent growth in 2015. In May the OECD had seen GDP down 2.3 percent this year and up 0.1 percent in 2014. "Repairing bank balance sheets and ensuring recapitalisation of banks are the most important policy issues for stabilising the economy," it said.
19.11.2013 17:07 The OECD again cut its 2013-2014 growth outlook for Russia
The OECD again cut its 2013 growth outlook for Russia, to 1.5 percent from the 2.3 percent it forecast in May. It also reduced its 2014 outlook to 2.3 percent from 3.6 percent, but saw growth picking up to 2.9 percent in 2015. Growth should gradually strengthen thanks to infrastructure spending and investment in the mining sector as the euro area recovers. Low unemployment should keep consumption growth solid, it said. Interest rate cuts would not be appropriate until core inflation declines more rapidly, while currency depreciation adds to inflation pressures, it said, adding: "Little space is available for monetary policy rate cuts in 2013 and 2014." Russia`s economy grew less than estimated in the third quarter as a lack of investment kept the world`s largest energy exporter from reversing its worst slowdown since a 2009 recession. Gross domestic product expanded 1.2 percent from a year earlier, the same pace as in the previous three months, the Federal Statistics Service in Moscow said. That matched the Economy Ministry`s forecast and trailed the 1.4 median of 19 estimates in a Bloomberg survey.
15.11.2013 16:10 Eurozone economic recovery falters in third quarter
The eurozone`s economic woes persisted in the third quarter as Italy`s longest recession continued and a contraction in French output dragged growth down to 0.1%. In the summer, hopes of a strong recovery were boosted by a second-quarter GDP rise of 0.3%, but the momentum of the first half of the year has fizzled out. The figures gave weight to fears that high unemployment, low inflation and disagreements among political leaders over further moves towards integration will keep the currency zone locked into a prolonged period of low growth. In France, a slump in exports and business investment failed to offset strong consumer spending to leave François Hollande`s socialist administration to cope with a 0.1% decline in GDP. Italy, which has faced prolonged period of political instability, was also mired in economic gloom after a 0.1% decline in GDP in the third quarter extended the country`s recession from the summer of 2011 to nine quarters. Of the smaller eurozone members, Austria returned to growth after a flat summer period with a 0.2% rise in GDP, while the Netherlands, which also flatlined in the summer, nudge 0.1% higher and Finland managed a 0.4% expansion. German growth fell from 0.7% in the second quarter to 0.3%, though several analysts said the eurozone`s powerhouse economy was merely returning to its expected annualised rate of 1.2% a year.
06.11.2013 18:19 Japan is likely to see a sharp slowdown in its expansion in the July-September period
After two quarters of pacesetting growth among the world`s leading economies, Japan is likely to see a sharp slowdown in its expansion in the July-September period, as stalling exports and weaker consumer spending weigh on the economy. Gross domestic product likely expanded by 0.4% during the quarter from the previous one, or at an annualized pace of 1.7%, according to a median forecast of 12 economists surveyed by The Wall Street Journal. Preliminary GDP data for the quarter will be released Nov. 14. The estimate is less than half the annualized 3.8% increase in the April-June quarter and the 4.1% gain during the January-March period. Japan`s industrial output rose 1.5 percent in September from the previous month, as stronger production of vehicles and electronic components added to signs the recovery in the world`s third-largest economy is gaining traction. The Ministry of Economy, Trade and Industry said Wednesday a survey found manufacturers expect output to rise 4.7 percent in October but to decline in November. The increase in September compares with a 0.9 percent decline in output in August. Increased shipments by refineries and of telecoms equipment also contributed to September`s rise. The unemployment rate also fell slightly in September, to 4.0 percent from 4.1 percent the month before. However the ratio of jobs available to job seekers remained flat at 95 per 100 job seekers. Japan`s exports have so far failed to recover as robustly as hoped. The trade deficit ballooned to 932 billion yen ($9.5 billion) in September, a fresh record for the month, as costs for imports of food and other necessities outstripped growth in exports. A recovery in consumer demand is thus crucial for Abe`s economic strategy, which has focused on aggressive monetary easing aimed at spurring inflation, and strong government spending. Reforms meant to shore up Japan`s waning industrial competitiveness have yet to be enacted or spelled out in detail. So far, there is scant sign that Japanese companies are making significant commitments of new investment at home, despite the extremely low cost of capital given the central bank`s commitment to keeping interest rates near zero. But while business sentiment has markedly improved, excess capacity has kept most from spending more on plants and equipment in Japan. Instead, most are opting to shift factories overseas or to step up acquisitions of foreign companies. Wage increases have likewise been scant, raising the prospect that Japanese consumers will face higher prices without a commensurate increase in their purchasing power.
28.10.2013 19:32 UK GDP: fastest growth for three years
UK economic output rose by 0.8% between July and September, official GDP figures show. The Office for National Statistics said there had been a "fairly strong" performance across all sectors. The data builds on a 0.7% GDP rise in the April-June period and is the best quarterly performance since 2010. Chancellor of the Exchequer George Osborne tweeted: "This shows that Britain`s hard work is paying off & the country is on the path to prosperity." Deputy Prime Minister Nick Clegg said the figures "show that we are firmly on the road to economic recovery". The ONS data for construction was up 2.5% over the quarter, the second successive quarter of growth after a volatile performance over the past year. The BBC`s chief economics correspondent, Hugh Pym, said: "This could signal that a recovery in that sector is really under way." House-builders have been buoyed by the Government`s Help to Buy scheme, which recently launched a new phase offering mortgage guarantees. The ONS said that production grew by 0.5%, though this remains 12.8% off its 2008 level, while within this, manufacturing improved 0.9% in the third quarter. The services sector, which represents three-quarters of economic output, grew by 0.7%. Output from services is now 0.4% above its pre-crisis peak in the first quarter of 2008.
19.10.2013 12:37 World economic outlook gloomy, UN report says
The world economy is still in disarray five years after the financial crash, a new UN economic report said. The UN Conference on Trade and Development issued a gloomy assessment of a stagnant global economy. "The global economy is still struggling to return to a strong and sustained growth path,” Unctad reported. World output grew 2.2 per cent last year and is forecast to grow at a similar rate this year, it said. Developed countries are expected to show the poorest performance, with about 1 per cent increase in gross domestic product. Developing economies are likely to grow by almost 5 per cent, and and transition economies by 3 per cent. “Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States. This seemed to justify the adoption of an export-oriented growth model," a formula bound to crash, the report said. "But the expansion of the world economy, though favourable for many developing countries, was built on unsustainable global demand and financing patterns. Thus, reverting to precrisis growth strategies cannot be an option," Unctad said. Even after five years of crisis, the report said, “The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all." Unctad said: "The momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain."
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