The Lastest Macroeconomic News
07.04.2016 11:50 Impact of China on advanced economies set to grow
Emerging markets such as China pose a growing risk to advanced economies with events in developing economies increasingly responsible for price movements in financial markets in richer countries, the International Monetary Fund has warned. Moreover, markets were only just beginning to feel what was likely to be the growing impact of China in the years to come as its financial links with the rest of the global economy increase, IMF economists said on Monday. “It is likely that China`s spillovers to global financial markets will increase considerably in the next few years,” they said in a chapter of the upcoming Global Financial Stability Report released ahead of next week`s spring meetings of the IMF and World Bank. The fund`s warning comes amid continuing concerns about the slowing growth in China and its leadership`s efforts to shift the economy from one driven by manufacturing exports and investment to one more reliant on domestic consumption. It also comes as central banks in advanced economies such as the US Federal Reserve are increasingly factoring in what is happening in emerging markets such as China into their own policy calculations.
05.04.2016 15:11 Oil, taxes and big problems for Russia`s economy
Things are getting bad in Russia - so bad that the country is weighing sacrificing its future in order to survive its present. A conflict is simmering in Russia as the country`s Finance Ministry pushes for increased taxation of the country`s oil industry in order to support its budget. A contracting economy and a persistently low oil price have severely hurt the country`s budget, so officials are seeking to draw more revenue from domestic energy companies - instead of severely cutting costs, which Moscow fears could bring dire political consequences. This plan likely makes short-term sense to the Kremlin, but it could cripple the oil industry - and by extension Russia`s long-term growth prospects - for years to come, experts told CNBC. "This would have decadeslong effects," Lauren Goodrich, a senior Eurasia analyst at geopolitical intelligence firm Stratfor, said of a strong tax on the oil industry. If Russia`s energy resources don`t see new investments in the next two years, she said, then the country could experience lengthy declines in oil production - old Soviet-era wells drying up, without new ones coming on.
03.04.2016 14:13 Economic Development Ministry sees upward trend for Russian economy
In a new economic outlook for 2016-2018, the Russian Economic Development Ministry says recession this year won’t be as significant, as previously forecast. The economy is due to return to growth in 2017, provided the oil price is above $45 a barrel. Previously, the ministry expected Russian GDP to contract 0.8 percent this year. In the improved forecast, it will contract 0.3 percent, according to the report, obtained by Vedomosti business daily. Inflation in 2016 is expected to hit seven percent, compared to the 8.5 percent forecast. In the next two years inflation is projected to go down to 5.5 and 5.2 percent, respectively. The Ministry of Economic Development also expects a gradual increase in oil prices - from $40 per barrel this year to $50 in 2018 and 2019. Estimates on capital outflow from Russia have also been reassessed. The ministry expects that $40 billion will leave the country this year instead of $50 billion. In the best-case scenario this number will fall to $25 billion by 2018. Real wages are due to contract 2.9 percent this year and return to growth in 2017. The ruble is forecast to gradually grow against the US dollar, trading at 57.1 to the greenback in 2018.
01.04.2016 19:36 Russian Economy Shrank Less Than Forecast, Enduring Crash in Oil
Russia`s economy shrank less than forecast in the fourth quarter, using a flexible exchange rate to ride out the collapse in oil prices. Gross domestic product fell 3.8 percent from a year earlier after a revised 3.7 percent drop in the previous three months, the Federal Statistics Service said Friday. The median estimate of 13 analysts surveyed by Bloomberg was for a 3.9 percent decline. Contractions in the first and second quarters of 2015 were revised to 2.8 percent and 4.5 percent from 2.2 percent and 4.6 percent, leaving the full-year decline unchanged at 3.7 percent. There`s “evidence that the economy is going through a continuous adjustment to "the new normal": the low oil price, a free-floating ruble and geopolitical uncertainty fed by sanctions,” Vladimir Miklashevsky, a strategist at Danske Bank in Helsinki, said before the data release.
31.03.2016 13:07 Russian Economic Crisis Risks Stagnation, Degradation
The Russian economy is locked in an especially bad crisis. It differs significantly from the crises of 1998 and 2008-2009, when rapid downturns were followed by equally rapid recoveries. If anything, the current crisis more closely resembles that of the early 1990s, when Russia was transitioning from a planned to a market economy. Although salaries fell further then - by more than 50 percent - the same institutional problems caused both crises. The norms and rules now in place in the Russian economy are blocking its further development, just as they did back then. Budgets are in the worst condition. The federal budget deficit for 2015 totaled 2 trillion rubles ($32.8 billion) or 2.5 percent of gross domestic product. The combined deficit for all regional and municipal budgets totaled 2.7 trillion rubles ($44.3 billion), or 3.5 percent of GDP - 11 percent more than in 2014. Industrial output fell by 5 percent by May 2015. Household personal incomes dropped last year by 4.7 percent (and by 6.9 percent this February when compared to February 2015). Consumption slumped sharply, causing a 10 percent decline in retail sales. Construction was down by 13 percent in September 2015, and by 7 percent for the year overall. Investment continues to fall for the third consecutive year, and each year the rate of decline increases. Last year alone investment dropped by 8.4 percent. That means the crisis is continuing, and even if this or that sector has already "hit bottom," there is no guarantee that investment will not fall even further - because there are no drivers of growth in the Russian economy.
29.03.2016 13:16 U.S. consumer spending, trade data signal sluggish growth
U.S. consumer spending barely rose in February and inflation retreated, suggesting the Federal Reserve could remain cautious about raising interest rates this year even as the labor market rapidly tightens. Monday`s report from the Commerce Department also showed consumer spending in January was not as strong as previously reported. That, together with other data showing a widening in the goods trade deficit in February, indicated economic growth remained sluggish in the first quarter. "It speaks to the weakening in domestic economic momentum at the start of this year, further reinforcing the Fed`s cautious monetary policy bias," said Millan Mulraine, deputy chief economist at TD Securities in New York. Consumer spending edged up 0.1 percent as households cut back on goods purchases after a downwardly revised 0.1 percent gain in January. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.5 percent in January.
27.03.2016 13:45 Russia`s Economic Depression Continues; Market Info Becoming Harder To Obtain
Russia`s second year in negative growth territory will continue this year, but the good news is that it won`t be as bad as 2015. Back-to-back years of recessionary economics in the Russian economy are the equivalent of an economic depression, with 2017 now dependent on an oil and sanctions lift. Sberbank CIB, one of Russia`s biggest investment banks, said the economy will slip by as much as 1.5% this year. Finding out exactly what is going on is becoming harder given changes to government economic data releases. Russia isn`t in a hurry to tell the market how lousy things still are there. Small and regional banks in Russia continue to shut down. In September, Admiralteisky Bank had its licensed stripped by the Central Bank because it did not have enough reserves, among other issues. At least 100 banks have closed over the last two years ending 2015. The Russian Central Bank has spent billions of dollars on bailouts. Some bank owners have faced charges in court, while others have fled to the U.K. or Cypress. Retail sales and construction declined again in January, by 7.3% and 4.2%, respectively. Both also declined on a monthly basis, Sberbank said in an economic research note on Monday. Industrial output fell 2.2% yearly, but rose 0.4% from December. Agricultural output climbed 2.5% year over year in January as Russian farmers try to make up for import restrictions for European and Turkish fruits and vegetables.
25.03.2016 12:19 The Bank of Finland Thinks Russia`s Economy Isn`t Going To Improve In 2016
Back in the beginning of 2015, most professional macroeconomic forecasters predicted that Russia`s economic contraction would be relatively short and swift. No, there wasn`t universal agreement on the matter, but, based on futures prices, very few market participants thought that the rout in oil prices would be as sharp or sustained as has actually been the case. Because Russia`s economic health is so heavily influenced by the price of oil, the general expectation that energy prices would stabilize lead to a corresponding belief that the damage to the Russian economy would be relatively limited in scope. Things change, though, and as the scale of the collapse in energy prices has become steadily more evident, the expectations for the short-term performance of Russia`s economy have grown steadily more dire. The latest nasty prediction comes courtesy of the Bank of Finland`s Institute for Economies in Transition, which regularly publishes forecasts for the Russian economy. Previously, the Bank of Finland had forecast 2016 GDP growth on the assumption of $54 a barrel oil, a level about 45% below the average price for 2014. That would lead, according to their model, to a GDP loss of about 2%. Now, however, the bank has significantly reduced its expectations for future oil prices: they now project that price will not average $50 a barrel again until the end of 2018. This would mean that Russia`s economy would shrink by a little over 3% in 2016 and that economic growth would not return until 2018.
23.03.2016 12:02 Growth in Tourism Jobs Set to Boost World Economy
The tourism industry is fueling a global economic boost thanks to the addition of 7.2 million jobs worldwide last year. According to the annual economic impact report from the World Travel & Tourism Council (WTTC) released on Monday travel and tourism supported 284 million jobs, that`s one in every 11 jobs internationally. “Despite uncertainty in the global economy and specific challenges to travel and tourism last year, the sector grew by 3.1%, contributing a total of 9.8% to the global GDP,” David Scowsill, president and CEO of the World Travel & Tourism Council said. He added, “Terror attacks, disease outbreaks, currency fluctuations and geopolitical challenges have impacted the sector at a country or regional level, but travel and tourism at the global level continues to produce another robust performance.”
21.03.2016 12:03 Russian central bank holds rates, says tight policy to continue
The Russian central bank left its main lending rate at 11 percent on Friday as expected, but its rhetoric about the need to maintain tight monetary policy was more hawkish than many analysts had expected. Its cautious position underscores the continuing risks facing an economy battered by the precipitous decline in oil prices, although matters appear less bleak than they did at the time of the previous rates meeting in January, when the bank had warned it might need to raise rates to battle inflation. Commenting on the latest rates decision, the bank`s governor Elvira Nabiullina said it was too soon to call the all-clear. "The situation in the Russian economy has improved: inflation has fallen, the economic decline has slowed down, the rouble has strengthened," she said. "However, as before there is high uncertainty about the future dynamics of oil prices and other external conditions. In this situation it would be most correct not to make abrupt moves." Analysts had predicted no change in rates given the bank`s tough anti-inflation rhetoric. But most had also expected the bank to soften its rhetoric by floating the possibility of rate cuts in the near future. That rhetoric remained relatively tough however, giving few grounds to expect imminent rate cuts. "To enable the accomplishment of inflation targets, the Bank of Russia may conduct its moderately tight monetary policy for a more prolonged time than previously planned," it said in a statement.
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