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15.09.2011 12:25 IMF`s Lagarde Says Global Economy in `Dangerous New Phase`

Risks to the global economy are rising and countries must be quick in adopting the right policy mix to ensure a continued recovery, International Monetary Fund Managing Director Christine Lagarde said. The new IMF chief, a former French finance minister, said monetary policy should remain easy because the risks of recession are greater than inflation risks. Inflation pressures from energy and food prices are abating and inflation expectations in advanced economies such as the U.S. and Europe are well-anchored, Lagarde said. Economic growth slowed to an annualized rate of 0.5% in Germany during the second quarter. The gross domestic product of the 17 nations that have adopted the euro rose at an annualized rate of 0.7% during the quarter, according to data from the European Union`s statistics agency Eurostat. That was half the growth rate economists expected, stoking fears of a renewed recession. The U.S. should focus on boosting growth and jobs in the short term, while coming up soon with measures that can contain a rising public debt further down the road, Ms. Lagarde said. Ms. Lagarde discussed a range of economic matters with Mr. Obama on Friday, including the need to foster growth in the short run, while ensuring that high budget deficits are cut further down the road. It was their first meeting since the former French finance minister became the head of the global lender. Ms. Lagarde also urged Europe to recapitalize its banks urgently, and for politicians there to come up with a common vision for the continent`s future.

24.08.2011 17:48 Russia`s GDP grew 3.8 percent in January-July 2011

Russia`s GDP grew 3.8% in January-July, the Economic Development Ministry said in a monitoring report late Monday. Annualized GDP growth in July amounted to 4.2%. The country`s economic growth accelerated in July, with seasonally adjusted GDP reaching 0.4%, up from 0.2% in June, the ministry said. This growth was achieved primarily on the strength of performance in construction and retail trade. A fall was registered in industrial production, including mineral resource production, and processing industries. Russia`s economy grew by 3.7% in the first half of the year compared to the same period in 2010, preliminary data from the Federal Statistics Service showed Wednesday, coming in below official expectations despite months of strong oil prices. The Economy Ministry last month forecast growth of 3.9% for the first six months of the year. Prices for oil--Russia`s chief export--stayed elevated in the period, prompting the country to raise the average oil price on which its 2011 budget is based, to $105 per barrel from $81 per barrel. Fixed investment also came in lower than expected, that data showed. It rose by 7.9% in the year to July, compared with an analyst forecast for an 8.8% increase.

19.08.2011 10:55 The US bank Morgan Stanley has worsened the forecast for the world GDP growth

The US bank Morgan Stanley has worsened the forecast for the world GDP growth: in 2011 it will go down from 4.2% to 3.9% and in the future from 4.5% to 3.8%. The bank states that the USA and Europe are close to recession. The bank also blames Europe for political mistakes and the Old World`s inadequate response to the sovereign debt crisis. The main reasons for our growth downgrade, apart from disappointing incoming data, are recent policy errors in the U.S. and Europe plus the prospect of further fiscal tightening there in 2012, Morgan Stanley analyst Joachim Fels wrote in the note. This is eroding business and consumer confidence and has weighed down on financial markets, the analyst added. A negative feedback loop between weak growth and soggy asset markets now appears to be in the making. Morgan Stanley also reduced its forecast for India`s 2012 gross domestic product growth to 7.4 per cent from 7.8 per cent and its estimate for the fiscal year ending March 31, 2013, to 7.6 per cent from 8 per cent.

17.08.2011 17:29 US industrial production advanced 0.9 percent in July 2011

Industrial production advanced 0.9 percent in July. Although the index was revised down in April, primarily as a result of a downward revision to the output of utilities, stronger manufacturing output led to upward revisions to production in both May and June. Manufacturing output rose 0.6 percent in July, as the index for motor vehicles and parts jumped 5.2 percent and production elsewhere moved up 0.3 percent. The output of mines advanced 1.1 percent, and the output of utilities increased 2.8 percent, as the extreme heat during the month boosted air conditioning usage. At 94.2 percent of its 2007 average, total industrial production for July was 3.7 percentage points above its year-earlier level. The capacity utilization rate for total industry climbed to 77.5 percent, a rate 2.2 percentage points above the rate from a year earlier but 2.9 percentage points below its long-run (1972-2010) average.

15.08.2011 19:48 Japan`s GDP contracted for the third quarter in a row in Q2 2011

Japan`s GDP contracted for the third quarter in a row in Q2. It fell by 1.3% q/q AR (consensus: -2.5%, Danske Bank: -1.9%) compared with a 3.6% q/q AR contraction in Q1. The contraction was solely due to a supply-driven decline in exports. Net exports subtracted close to 4pp q/q AR from GDP growth in Q2. Domestic demand on the other hand actually managed to expand 0.9% q/q AR in Q2, albeit this was slightly less than we expected. The increase in demand has largely been satisfied by the continued increase in Japans imports and companies continuing to cut inventories, albeit inventories dropped substantially less than in Q1. Hence, inventories added close to 2pp q/q AR to GDP growth in Q2. The resilient Japanese imports in the wake of the earthquake have been quite remarkable. Japans imports improved 0.5% q/q AR in Q2 after increasing a solid 6.1% q/q AR in Q1. Hence, the expected sharp drop in Japans imports in the wake of the earthquake has never materialised, suggesting that the direct negative impact on demand outside Japan from the earthquake has actually been quite modest, because the lack of domestic supplies has to a large degree been substituted with increased imports.

13.08.2011 18:58 In June 2011 industrial production fell by 0.7% in the euro area and by 1.2% in the EU27

In June 2011 compared with May 2011, seasonally adjusted industrial production fell by 0.7% in the euro area (EA17) and by 1.2% in the EU27. In May production rose by 0.2% in both zones. In June 2011 compared with June 2010, industrial production increased by 2.9% in the euro area and by 1.7% in the EU27. These estimates are released by Eurostat, the statistical office of the European Union. In June 2011 compared with May 2011, production of durable consumer goods fell by 2.5% in the euro area and by 2.2% in the EU27. Capital goods decreased by 1.5% and 2.9% respectively. Intermediate goods declined by 0.6% in the euro-area and by 1.3% in the EU27. Non-durable consumer goods dropped by 0.5% and 0.8% respectively. Production of energy fell by 0.4% in the euro area, but gained 0.8% in the EU27. Among the Member States for which data are available, industrial production fell in fifteen, rose in five and remained stable in the United Kingdom. The largest decreases were registered in Denmark (-5.8%), Portugal (-3.5%), Finland (-3.3%) and Slovenia (-2.7%), and the highest increases in Latvia (+4.1%) and Lithuania (+3.7%). In June 2011 compared with June 2010, production of capital goods grew by 7.0% in the euro area and by 5.0% in the EU27. Intermediate goods increased by 3.3% and 2.3% respectively. Non-durable consumer goods rose by 1.2% in the euro-area and by 0.5% in the EU27. Durable consumer goods fell by 2.7% and 4.1% respectively. Production of energy decreased by 5.1% in the euro area and by 4.6% in the EU27. Among the Member States for which data are available, industrial production rose in thirteen and fell in eight. The highest increases were registered in Estonia (+23.7%), Latvia (+15.2%), Lithuania (+10.3%), the Czech Republic (+7.4%) and Germany (+7.0%), and the largest decreases in Greece (-13.2%), the United Kingdom (-5.3%) and Denmark (-3.3%).

06.08.2011 16:46 Standard & Poor`s downgraded the U.S.`s AAA credit rating for the first time since 1917

Standard & Poor`s downgraded the U.S.`s AAA credit rating for the first time, slamming the nation`s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits. S&P lowered the U.S. one level to AA+ while keeping the outlook at negative as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or new fiscal pressures result in higher general government debt, the New York-based firm said yesterday. Lawmakers agreed on Aug. 2 to raise the nation`s $14.3 trillion debt ceiling and put in place a plan to enforce $2.4 trillion in spending reductions over the next 10 years, less than the $4 trillion S&P had said it preferred. Even with the specter of a downgrade, demand for Treasuries surged as investors saw few alternatives amid concern global growth is slowing and Europe`s sovereign debt crisis is spreading. The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government`s medium-term debt dynamics, S&P said in a statement late yesterday after markets closed. S&P`s action may hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation`s borrowing costs by $100 billion a year. The U.S. spent $414 billion on interest expense in fiscal 2010, or 2.7 percent of gross domestic product, according to Treasury Department data.

17.07.2011 13:55 Russian industrial production rose 5.3 percent in H1 2011 from a year earlier

Russia`s domestic economy is slowly coming to life, judging by the latest string of data from Russia`s statistical agency, Rosstat. Russian industrial production accelerated in June for the first time in five months as corporate investment rebounded. Output at factories, mines and utilities rose 5.7 percent from a year earlier, the most since February, after a 4.1 percent increase in May, the Federal Statistics Service in Moscow said. The median estimate of 14 economists in a Bloomberg survey was for an annual gain of 4.8 percent. In January-June Russian industrial production rose 5.3 percent from a year earlier. Barclays economist Vladimir Pantyushin writes from Moscow in a note to clients that the improvement has been entirely a product of manufacturing sectors up 7.1% yoy versus 5.0% in May. Industrial manufacturing has been beating other manufacturing sectors over the last two years thanks to consumer demand. Export driven manufacturing sectors, as well as utilities, have decelerated to 1.6% and 1.5% yoy, respectively.

13.07.2011 21:17 China`s GDP growth rate slowed to 9.5 per cent in the second quarter of the year

China`s economy slowed down amid inflation concerns as its GDP growth rate slid to 9.5 per cent in the second quarter from 9.7 per cent in the first, while the economy in general expanded by 9.6 per cent in the first half of this year. China`s GDP growth rate slowed to 9.5 per cent in the second quarter of the year from 9.7 per cent in the first quarter, the National Bureau of Statistics said. The gross domestic product rose by 9.5 per cent in the second quarter, tapering off slightly from the 9.7 per cent growth rate posted in the first quarter, NBS spokesman Sheng Laiyun told a press conference. According to preliminary statistics, the country`s GDP reached 20.446 trillion yuan ($3.146 trillion) in the first six months, Sheng said. China`s economic performance was `generally good` and developed according to macro-economic regulation in the first half, he said. China`s consumer price index, the main gauge of inflation, rose 5.4 per cent year-on-year in the first half of this year, accelerating from 5 per cent in the first quarter of this year.

19.06.2011 13:55 The IMF expects global GDP to rise this year by 4.3%, down from its previous 4.4% estimate

The IMF cut its forecast for global economic growth, albeit slightly. The organization expects global GDP to rise this year by 4.3%, down from its previous 4.4% estimate. The global economy, hit by slowdowns in Japan and the United States, is expected to reaccelerate in the second half of the year, but growth remains unbalanced and concerted policy action by major economies is needed to avoid lurking dangers, the IMF advises. For the U.S., the new prediction calls for a 2.5% rise, down from a 2.8% forecast in April. That`s more or less what I`ve been expecting, which is to say growth of some degree. Not great, but enough to keep the macro demons at bay. Next week`s economic data updates may change my view, but as I`ve been discussing this week, the numbers for the U.S. still fall short of risking a new recession. The argument that`s it`s soft patch still look more compelling, if only moderately. Apparently the IMF agrees.


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