The Lastest Macroeconomic News
11.03.2016 12:42 Has The Russian Economy Already Passed The Bottom?
At the end of 2015, many high-ranking officials of the Russian government assured us that the country`s economy had already passed the bottom of the economic recession. In order to confirm this, they tend to refer to the positive dynamics of the monthly change in GDP, the rate of employment and corporate earnings growth. However, the analysis of the latest key macroeconomic data do not fundamentally support, strictly speaking, such optimistic projections. Talking about the Russian economy, it is crucial to address the oil issue. I assume that all the latest negotiations on the matter of freezing the level of oil production between Russia and OPEC will be crowned with success. Iran will probably receive preferential treatment within the framework of this agreement and will be able to increase production in certain limits. However, given the record levels of commercial oil stocks in the United States, and the U.S. shale oil producers` statements of readiness to restart active oil production when the price is above $40 a barrel, it is possible to predict that during 2016, the average Brent oil price should not exceed the level of $40. This price level implies a lower export tax burden on the Russian oil sector but inevitably leads to reduction in the revenue part of the budget in 2016.
09.03.2016 14:23 Russian economy likely to remain in recession in 2016 as oil price outlook remains low
Russia`s economic outlook continues to be bleak because of the prospect of continuously low oil prices. Following the drop in commodities prices, with oil prices dropping to the lowest level in over a decade, Brent crude is expected to be within the range of USD 30-40/bbl for the rest of 2016. This will not be enough for Russia`s economic rebound momentum, particularly if both consumer spending and investment are expected to be relatively weak. Russia`s economy contracted 3.7% in 2015. Sharp decline in investment and domestic spending were the main reasons for the recession. Admittedly, final consumption shrank 7.9% y/y as consumer spending declined over 10%. Meanwhile, gross fixed capital formation fell 7.6% y/y and government consumption shrank just 1.8% on back of significant attempts of government to give support to the economy.
07.03.2016 01:17 China cuts 2016 growth target amid continued economy concerns
China has cut its growth target for this year to a range of 6.5% to 7%, down from 7%, a further sign that the world`s second-largest economy is slowing. Premier Li Keqiang said in a speech at the opening of the National People`s Congress parliament, attended by 3,000 delegates, that among the “main development targets” for the nation was “GDP growth 6.5% to 7%”. The goal had been set at “about 7%” for 2015, but expansion came in at 6.9%, it`s lowest for a quarter of a century. China`s leaders have traditionally declared the GDP goal at an easily achieved level that was regularly exceeded, and even then the objective is usually approximated to provide room for positive spin just in case. Using a range, rather than a single figure, will widen the target even further. The downwards revision comes after factory output contracted in China during February.
05.03.2016 12:45 Russia`s Annual Consumer Inflation Slowed to 8.1% in February
Russia`s annual consumer inflation slowed to 8.1% in February, data from the Federal Statistics Service showed Friday. February`s decline in the annual reading, from 9.8% in January, was expected by analysts as the pace of price growth slows due to the base effect. On a monthly basis prices went up by 0.6% in February after growing 1% in the preceding month. The annual inflation in Russia has fallen into single digits in February for the first time since December 2014. In 2015, inflation in Russia reached 12.9 percent — the highest recorded rate since 2008, Rosstat said. The Ministry of Economic Development forecasts that prices in Russia will grow 8.5 percent in 2016. The Central Bank expected that inflation would not exceed 7 percent - with the oil price at $35 per barrel.
03.03.2016 12:26 Russian Government Approves $9B Plan for Battered Economy
The Russian government has approved a 684.8 billion ruble ($9.3 billion) anti-crisis plan as the country`s economy struggles with low oil prices and Western sanctions, and looks set to contract for a second consecutive year. Russian Prime Minister Dmitry Medvedev said Tuesday that he had signed off on the 120-point plan. According to a copy of the plan published online by the Russian government it is designed to “guarantee the stable social and economic development of the Russian Federation in 2016." The Russian economy shrank 3.7 percent in 2015 and rating agency Standard and Poor`s said last week it expected a second year of recession in 2016, with gross domestic product predicted to contract by 1.3 percent. The price of oil, Russia`s chief export and forex earner, collapsed from highs of $115 a barrel in mid-2014 to below $30 a barrel earlier this year. The anti-crisis plan approved by the government comes after weeks of wrangling and is substantially smaller than initial proposals. Russian Economic Development Minister Alexei Ulyukayev told a Feb. 18 cabinet meeting that the anti-crisis plan would cost 880 billion rubles ($11.9 billion).
01.03.2016 14:38 Citi: Risk of global recession rising
The risk of the global economy falling into a recession is rising, as fundamentals remain poor, analysts at Citigroup said. "We are currently in a highly precarious environment for global growth and asset markets after two to three years of relative calm," Citigroup said, noting that global growth was "unusually weak" in the fourth quarter at around 2.0 percent on-year. "The most recent deterioration in the global outlook is due to a moderate worsening in the prospects for the advanced economies, a large increase in the uncertainty about the advanced economies` outlook (notably for the U.S.) and a tightening in financial conditions everywhere," the bank said. At the same time, fundamentals remain poor, including concerns about a structural and cyclical slowdown in China and its "unsustainable" currency regime, excessive leverage and rising regional risks, such as the risk the U.K. may exit the European Union, it said.
29.02.2016 12:54 Economy Ministry forecasts 1% rise in Ukraine`s GDP in H1 2016
The Ministry of Economic Development and Trade of Ukraine expects the revival of economic activity and the growth of gross domestic product (GDP) by 1% plus or minus 0.5 percentage points in the first half of 2016 after the fall by 10% in 2015 and 6.8% in 2014. "The revival... is due to both statistical effects, namely low base, and economic such as the resumption of work of enterprises in the east of the country, a growth in domestic demand due to the level of wages, the reduction of losses because of a lower load (social security tax) on payroll," the ministry said. Simultaneously the agency points out the continuing risks of falling prices in the key commodity markets of Ukrainian exports and restrictions imposed by the Russian Federation. The ministry said that data for the fourth quarter of 2015 confirm the restoration of the Ukrainian economy: according to tentative assessment of the State Statistics Service, the seasonally adjusted GDP grew by 1.5% compared to the previous quarter, while in the third quarter it grew by 0.5% compared to the second quarter.
28.02.2016 17:39 Bank of Russia Sees GDP Seen Down Almost 1% in First Quarter 2016
Russia`s economy is expected to contract by almost 1% in the first quarter, compared with the previous quarter on a seasonally adjusted basis, the central bank said Friday. Hit by a drop in prices for oil, Russia`s key export, as well as Western sanctions, the country`s economy is widely expected to shrink for the second year in a row in 2016. In annual terms, gross domestic product may fall by up to 2.5% in the first quarter, the central bank said. The Bank of Russia said the economic situation has improved somewhat this year. A year-on-year drop in retail sales in January was not as deep as in December, while the unemployment rate was steady. Exports and services are expected to support the economy in the first quarter.
26.02.2016 12:28 IMF: Russian Economy`s Contraction to Slow Down
The contraction of Russia`s economy stemming from low oil prices and Western sanctions will slow down, International Monetary Fund (IMF) said in its Global Prospects and Policy Challenges report. "In Russia, the pace of contraction triggered by lower oil prices and sanctions is expected to slow," the report stated. The IMF noted that Russia needs "some spending adjustment" in 2016 to offset the negative effect of low oil prices. The report added that fiscal consolidation should continue over the subsequent medium term. The IMF also advised Moscow to carry out structural reforms to lift economic growth and ensure continued governance. "In Russia, structural reform should focus on enhancing governance and property right protection, lowering administrative barriers and regulation, increasing competition in domestic markets, and reinvigorating the privatization agenda as soon as market conditions permit," the report said.
25.02.2016 22:49 Russia`s national rating agency projects 1.7% GDP contraction for 2016
Analysts at Russia`s Analytical Credit Rating Agency (ACRA) project 1.7% GDP contraction for 2016, its Chief Executive Officer Ekaterina Trofimova said. "Short-term macroeconomic forecasts are still conflicting. According to ACRA analysts, amid current macroeconomic and geopolitical trends we expect GDP to contract by around 1.7% in 2016," she said. Russia`s budget for 2016 is based on $50 per barrel price for Urals crude oil, with budget revenues totaling 17.5% of GDP (13.738 trillion rubles, or $178.5 bln), expenditures at 20.5% of GDP (16 trillion rubles, or around $209 bln) and budget deficit at 3% of GDP (2.36 trillion rubles or $30.6 bln). The Finance Ministry officially projects 0.7% GDP growth for this year.
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