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27.09.2011 16:52 The World Trade Organization cut its 2011 trade growth forecast

The World Trade Organization cut its 2011 trade growth forecast to 5.8 percent from 6.5 percent as earlier predicted, amid increasing economic uncertainty on Sept 23th. "Members must remain vigilant. This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future," warned Pascal Lamy, director-general of the WTO, in a statement. Trade volumes in developed economies are now projected to grow by 3.7 percent for 2011, as opposed to the 4.5 percent predicted in April. For developing economies, full year trade growth is expected to reach 8.5 percent, down from the earlier forecast of 9.5 percent. WTO economists said that since their previous forecast, "developed economies in particular have been buffeted by strong headwinds, including the lingering effects of the earthquake and tsunami in Japan, the prolonged budget impasse and credit downgrade in the United States, and the ongoing euro area sovereign debt crisis." Poor output and employment data have also hammered consumer confidence and contributed to the turmoil in the financial markets. German exports have recently "turned ominously downward" with year-on-year growth falling from 36 percent in May to 16 percent in July. Likewise in France, export growth tumbled from 44 percent in May to 9 percent in July. Strong growth in China and other emerging economies are currently helping to buffer the overall slowdown. But the economists warned that the current forecast still carries "an unusually high degree of uncertainty" as it is made on the assumption that trade would slow down instead of declining drastically. On the upside, the economy may see a pick up in growth if policymakers are able to find credible solutions to the debt crisis. "On the other hand, policy missteps could trigger wider instability along the lines of the crisis that followed the failure of Lehman Brothers in 2008," the WTO said. "Weighing these factors, we believe that risks to the forecast are firmly rooted on the downside but we should not ignore the fact that there is some upside potential," it warned. The WTO noted that member states resisted protectionist pressures during the financial and economic crises of 2008 to 2009, but another sharp downturn could test their will. "Another downturn in the global economy could strain their resolve to the breaking point and trigger a descent into self-destructive protectionism," the trade body feared. Global trade expanded by a record-breaking 14.5 percent in 2010, making up some ground lost in 2009`s slump of 12 percent.

20.09.2011 11:03 U.S. Industrial Production Rises Unexpectedly in August 2011

U.S. industrial production (IP) unexpectedly climbed 0.2% in August, above market expectations for an unchanged reading and following a solid 0.9% increase in July. With the increase in production, the capacity utilization rate edged up to 77.4 from a downwardly revised 77.3 in July (previously reported as 77.5). The rise in industrial production in August largely reflected surprisingly strong manufacturing activity along with continued gains in the mining sector, offset by a reversal in utilities output following an outsized gain the previous month. Despite an earlier reported 3,000 decline in manufacturing employment in the month, manufacturing output rose 0.5% in August, building further on an unrevised 0.6% gain in July. Part of the gain in August reflected a further 1.7% rise in motor vehicle output that built on a 4.5% surge in July. This provides additional evidence that transitory second-quarter 2011 weakness in production caused by supply-chain problems resulting from the natural disasters in Japan in March continued to reverse in August. Utilities output fell 3.0% as temperatures cooled after an unusually hot July boosted electricity use to power air conditioners in that month. Mining output rose for a sixth consecutive month, jumping 1.2% following a 1.1% increase in July. The rise in industrial production in August is encouraging, particularly given earlier indications that growth in manufacturing employment stalled in August as companies appeared reluctant to hire in the face of substantial financial market turmoil earlier in the month. Continued growth in output implies the potential for hiring to pick up in the coming months. The increase in August follows a solid 0.9% increase in July to leave the average level of industrial production for the combined two months at an annualized 4.6% above its second-quarter average. This points to a likely acceleration in the third quarter of the year from the modest 0.5% gain in IP in the second quarter. Ongoing concerns about the European sovereign-debt crisis and the durability of the U.S. economic recovery will likely continue to weigh on business confidence in the near term; however, much of the weakness in manufacturing in the second quarter was related to supply-chain disruptions in the auto industry that resulted from the natural disasters in Japan in March. The rebound in activity as these temporary impediments to growth reverse remains a key component of our forecast for GDP growth to pick up to a 2.4% rate in the third quarter of 2011 from the disappointingly weak 1.0% and 0.4% gains in second and first quarters respectively.

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.

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