The Lastest Macroeconomic News
28.10.2015 13:54 Is the global economy heading for recession?
Troubles in emerging markets are beginning to affect the developed world. As far as economic expansions go, our`s is pretty long in the tooth. Since World War II, the average length of time between recessions is about 58 months. With the current cycle clocking in at 81, it`s natural to wonder if the next downturn is imminent. Meanwhile, a worrying level of data from abroad shows that the troubles in emerging markets are beginning to affect the developed world: In Germany, Europe`s strongest economy, exports fell 5.2% in August from the previous month, the Federal Statistics Office in Wiesbaden announced. In the U.K., where growth had been outstripping most of the rest of the developed world, recent data shows output in Britain`s construction sector plunged by 4.3% in August, the sharpest monthly drop since 2012. In Japan, things don`t look much better. Serious declines in industrial output over the summer suggest to some that the world`s third largest economy has already fallen back into recession. Former Treasury Secretary Larry Summers also sees global economic trouble up ahead. In an op-ed published on Thursday titled “The global economy is in serious danger,” he argues that rising economic inequality, slowing population growth, and the increased need for financial regulation, and the fact that the innovation that is taking place isn`t very labor intensive all point to a slowdown.
27.10.2015 13:22 Why Russian inflation will fall `abruptly` next year
Russia`s troublesome inflation rate will start to drop "abruptly" by the start of next year, the governor of Russia`s central bank told CNBC, as the monetary authority`s "tough" monetary policy starts to have the right effect. Inflation in Russia stands at 15.7 percent, a far cry from the central bank`s inflation target of 4 percent. The country`s central bank kept interest rates at 11 percent in August in a bid to tackle the high rate, a controversial move for a bank to make while an economy is in recession. Russian Central Bank Governor Elvira Nabiullina told CNBC this weekend that the bank needed to focus on cutting inflation, despite Russia`s turbulent economy, which is expected to shrink 3.7 percent this year. "The International Monetary Fund sees Russia`s inflation rate to be higher than our forecasts, and it means that we should be more attentive to the inflation risks, because our task is to reduce inflation to achieve our goal of 4 percent by 2017," Nabiullina said, speaking to CNBC on the sidelines of the International Monetary Fund/World Bank`s annual conference in Peru.
26.10.2015 11:47 This is how much Russia`s war in Syria costs
Russian air strikes in Syria are costing up to $4 million per day, according to data collected by a defense think tank for the Moscow Times newspaper. Data collected by IHS Jane`s, a renowned intelligence provider for the defense industry and governments, showed that bombing raids, supply runs, infrastructure and ground personnel — along with a salvo of cruise missiles fired into the conflict zone — have cost Russia between $80 million and $115 million since strikes began on September 30. Compared to Russia`s 3.1 trillion ruble ($50 billion) defense budget for 2015, the figure appears low but the Kremlin could see its costs and commitments grow, the Moscow Times reported. Russia is currently struggling economically on the back of international sanctions placed on the country for its annexation of Crimea in 2013 and role in the pro-Russian uprising in east Ukraine last year. Sanctions provoked investor caution over Russia which saw capital outflows and a fall in the ruble`s value as a result. That, coupled with the sharp decline in oil prices, has contributed to Russia`s parlous economic situation, yet, still it has willingly embarked on what could be a costly enterprise in Syria. Ostensibly involving itself in the civil war in the Middle Eastern nation in order to help an alliance of western powers trying to combat the terrorist group that calls itself "Islamic State," many believe that Russia`s real aim is to prop up the regime of controversial Syrian leader Bashar Al-Assad and to prevent more western influence in the region.
26.10.2015 00:10 Real Estate and Construction Sector Overview 2015
The real estate and construction sectors, including the many professions and fields associated with them, are among the larger components of the global economy. As of early 2015, the U.S. Bureau of Labor estimated that 6.34 million Americans were employed in the construction industry (up substantially from 5.97 million at the beginning of 2014, but down dramatically from a peak of 7.6 million in 2007). The agency also estimated that 1.5 million Americans were employed in the real estate industry as of early 2014 (this figure is also up from 1.48 million as of the beginning of 2014, and equal to the 1.5 million of 2007). There was $13.4 trillion in all outstanding mortgage debt in America at year-end 2014, up slightly from $13.2 trillion one year earlier including homes and commercial projects. (Many houses are being purchased with cash, particularly when the purchaser is an investor. This mortgage total included $9.8 trillion in home mortgages, essentially unchanged from 2013). The total of all mortgages was $14.3 trillion in 2009. Home prices have rebounded dramatically from the depths of the recent recession, but in many markets they remain below their 2006-07 peaks. However, prices have risen to the point that bargains are hard to come by. More than a few observers are concerned that another housing bubble is developing in the most popular markets. Meanwhile, real estate had enjoyed a significant boom over the recent past in China, Canada, Australia and a few other select spots. By mid-2015, however, many international real estate markets were off their recent highs, including significant softness in China. Australia was suffering from a slump in coal, iron ore and other commodities, and Canada was suffering from a drop in oil and gas prices. These conditions hurt home prices.
23.10.2015 17:47 VTB Head: Russia`s end-game in Syria unclear
Russia`s involvement in the Syrian conflict could still either exacerbate or strengthen its relationship with Western powers, one of the country`s most influential business figures told CNBC. "Syria might become an area for co-operation or conflict," Andrey Kostin, president and chairman of Russian bank VTB, told CNBC. "Putin is very much trying to find a political situation." Russian President Vladimir Putin entertained controversial Syrian president Bashar Assad in Moscow this week, despite Assad`s status as a pariah to many Western governments. Russian forces, despite Moscow`s insistences that they are only targeting terrorists, have been criticised by the U.S. for backing the embattled regime`s military campaign in the war-torn country. "It`s very important that Assad goes to Russia, because unless you talk you won`t find a solution," Kostin said. He acknowledged the effect the cooling of relationships with the West was having on Russia`s economy, which has been battered by plummeting oil prices. "Never before, at least since the collapse of Soviet Union, has Russian business been so affected by the geopolitical situation," Kostin said. "We are very against the use of economic instruments in political conflicts, but that`s what we have." Kostin warned about the potential to broaden the sanctions, imposed on various Russian individuals and businesses. "We don`t think there will be new sanctions, but the EC (European Commission) has the opportunity to broaden the connotation of sanctions," he said, citing as an example that banks could not give advice on Russian investments.
21.10.2015 14:18 China GDP growth falls to 6.9% in Q3 2015
China`s economic growth slowed to 6.9 per cent in the third quarter, authorities in the world`s second-largest economy say, as global markets worry about its prospects. The figure released by the National Bureau of Statistics (NBS) was the worst for more than six years, although it was marginally above the median forecast in a poll of analysts by AFP. As the world`s biggest trader in goods and a giant market in itself, China is a key driver of the global economy, and stock exchanges around the world have been pummeled in recent weeks by concerns over its future. NBS`s figure is the first official confirmation of investors` fears over GDP since a Chinese stock market slump over the summer followed by a surprise currency devaluation in August. An NBS spokesman described the decline as a "slight slowdown", but said the economy was still running within a “proper range”. The spokesman said in a statement that “internal and external conditions are complicated”, acknowledging that “downward pressure for economic development still exists”. China`s GDP expanded 7.3 per cent last year, the slowest pace since 1990, and at 7.0 per cent in each of the first two quarters of this year. Beijing has set a target of “around seven per cent” for growth this year.
20.10.2015 19:37 Russia`s recession-hit economy slumps 4.3% in third quarter of 2015
Russia`s economy shrank 4.3% in the third quarter this year, the government said yesterday, as a recession caused by low oil prices and Western sanctions over Ukraine continued to take its toll. Deputy economy minister Alexei Vedev told Russian news agencies that preliminary estimates put the year-on-year drop in gross domestic product for the third quarter at 4.3%, after contracting by 3.8% in September compared with 4.6% in August. Officials in Russia are struggling to breathe life into the economy as the rouble has dropped precipitously in value and inflation and poverty have risen sharply. Overall, the economy shrank 3.8% for the first nine months of the year, Vedev said. In a sign of how tough the situation has become, official statistics released yesterday showed that consumer spending in the country is falling at its steepest rate in 15 years. Year-on-year retail sales fell by 10.4% in September, the sharpest drop since 2000 according to RIA Novosti news agency, as Russians have seen their spending power stripped away by the crisis. Statistics showed that real household incomes dropped by 9.7% in September on the back of a 9.8% plunge in August.
18.10.2015 11:29 No Good News for Russia`s Economy
Even such exciting foreign policy news as Russia`s intervention in the Syrian civil war does nothing to help the condition of this country`s economy. To the contrary, even prior to 2014, Russia spent an inordinate amount on military expenses and for the country`s "security" — in the broad sense of the word. And now that military action "justifies" otherwise pointless and nonproductive expenses, it has become even more difficult to reduce outlays for weapons production. It was clear 30 years ago that the Soviet economy could not cope with the burden of excessive military spending. However, leaders refused to cut those expenses until an economic disaster hit and those outlays — along with all others — were drastically reduced. And it is just as wrong to blame those who were in power at the time as it would be to blame an emergency room physician for the death of a patient who had led an unhealthy lifestyle for decades. Neither does the economy receive a boost from cultural news. News that prominent Russian-language writer Svetlana Alexievich won the Nobel Prize for literature cheered those who cherish Russian literature, but it only deepened the paranoia of those who believe the award is given for political reasons and that foreign forces have spawned the recent rash of civil wars and revolutions.
16.10.2015 11:33 Why the US market for buying and selling a business is improving
Why the market for buying and selling a business is improving While the post-recession business-for-sale market has generally favored buyers, there are several signs that we`re experiencing a shift towards a more balanced market. Early 2015 data shows an improvement in the overall financial health of small businesses and an uptick in the pace of small business transactions. In fact, data from BizBuySell.com`s most recent Q1 2015 Insight Report showed a 6 percent year-over-year increase in business transactions, which marks two years of consistent financial improvement in the business-for-sale market. Several factors contribute to market conditions that benefit buyers and sellers alike: 1. Improving financial health. 2. Growing supply and demand. 3. A more balanced market.
15.10.2015 17:51 Russian real estate investment market lags stabilization in macro indicators in H1 2015
In H1 2015 Russian real estate investment volumes decreased by 33% compared to the same period of the previous year, with total investment volumes at USD1.1bn, according to analysts` calculations. This number includes Q2 investment volume of USD578m, down 33% YoY. “Following the market dislocation of 2014 and Q1 2015, during Q2 2015 we have seen evidence building that the economy is starting to stabilize, which, in our view, will have a positive impact on the real estate market in the medium to long term,” - Tom Mundy, Head of Research, JLL, Russia and CIS, commented. – “First, the market has upgraded its GDP growth forecasts for Russia. For example, The World Bank lifted its forecast for 2015 forecast to a contraction of 2.7%, up from the contraction of 3.8% it predicted in April. In addition, it has revised up its growth forecast for 2016 to 0.7% from the decline of 0.3%. However there is unlikely to be a positive impact on Russian real estate market in short-term since inflationary expectations remain elevated which is leading to continued pressure on domestic demand. Furthermore, though the central bank continues to decrease the policy rate it remains high which is keeping the cost of debt financing beyond the reach of most. As a result we maintain our forecast for Russian real estate investment volumes for this year at USD3.0bn.”
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