The Lastest Macroeconomic News
18.12.2015 21:14 What awaits Russia`s economy in 2016 - collapse or recovery?
The collapse of oil prices in December has divided officials and analysts into pessimists and optimists, with Russian Finance Minister Anton Siluanov predicting on Dec. 12 that the price of oil in 2016 will fall below $30 per barrel in some periods, according to the TASS news agency. According to Siluanov, demand and the price of oil will continue to decline over the next year and Russia needs to start preparing for the worst. “We need to draw up backup plans now – on what would happen if the prices will fall further,” said Siluanov, recalling that the 2016 budget is based on a price of $50 per barrel, while the macroeconomic situation is currently showing no signs of changing for the better. An oil price of below $40 is considered a risk scenario in the government`s macroeconomic development plan for 2016. In this case, the economy will lose another 2-3 percent, the investment slowdown will continue, and inflation will fall to 7 percent by the end of 2016. According to Central Bank head Elvira Nabiullina, “the relevance of this scenario has recently increased.”
16.12.2015 13:54 Russia is bracing for $30 oil in 2016
Russia is planning for oil prices to drop to $30 per barrel in 2016. The country`s top finance official, Anton Siluanov, said the government must be prepared for prices to fall further in 2016 as the global glut grows and new supply -- for example from Iran -- enters the market. "Everything indicates that low oil prices are likely to dominate next year. And it is possible that at some periods the oil price will be $30 per barrel," Siluanov was quoted as saying by Russian state-run news agencies. That would spell more pain for Russia. Oil and gas exports make up almost half of government revenue. Oil futures were trading at their lowest level in nearly seven years on Monday, sliding below $35 per barrel. Russia is planning for oil to trade between $40 and $60 per barrel over the next seven years. Its 2016 budget is based on an oil price of $50 per barrel, Siluanov said. "Therefore, we must be prepared for difficult times," he was quoted as saying.
14.12.2015 13:48 Will Russia`s economic restrictions on Turkey backfire?
Turkey`s downing of a Russian jet in November tanked the phenomenally growing economic relations between the two countries. Following the incident, Russia announced economic sanctions banning imports from Turkey of fresh fruit, vegetables, poultry, salt and cloves beginning Jan. 1. Russia`s reactions have not been confined to economic sanctions. Almost immediately, Turkish businessmen visiting Russia were detained, restrictions were imposed on Turkish workers and visa-free visits to Russia will end Jan. 1. Russia officially called on its citizens not to go to Turkey, canceled charter flights, excluded Turkish companies from tenders and terminated military cooperation between the two countries. Apparently these serious measures were not enough to soothe the Russian administration`s anger. "Those who committed this treachery will get the punishment they deserve," Russian air force Cmdr. Viktor Bondarev said at the funeral of the Russian pilot killed over Turkey.
12.12.2015 16:05 UN: World Economy Stumbled in 2015, With 2.4 Percent Growth
The world economy stumbled in 2015, with growth estimated at just 2.4 percent this year following a nearly 60 percent drop in oil prices and an over 20 percent fall in commodity prices in the last 18 months, according to a U.N. report released Thursday. The report on the World Economic Situation and Prospects 2016 said many developing and former Soviet bloc countries suffered a broad slowdown to the weakest pace since the global financial crisis in 2008. The growth rate compares to 2.6 percent in 2014. "Weak global growth continues to hurt labor markets," U.N. Assistant Secretary-General for Economic Development Lenni Montiel said at a news conference. "Unemployment is on the rise in some regions, or remains stubbornly high in some countries. At the same time, job insecurity is becoming more entrenched amid the shift from salaried work to self-employment." One of the striking features is a sharp decline in investment across a large set of countries, said Hamid Rashid, chief of the Global Economic Monitoring Unit at the U.N. Department of Economic and Social Affairs. All but five of the 20 largest developing countries observed a decline in investment over the last 18 months, he said.
09.12.2015 20:18 Russian economy moves out of recession
In the wake of sharply declining oil prices, a ruble that almost halved in value and the imposition of economic sanctions, many believed 2015 would witness a default in Russia like that of 1998, with banks collapsing, inflation going through the roof and ordinary people facing catastrophe. Those fears were not realized. Russia`s economy took a battering and real incomes were bruised this year, but as 2016 comes into sight, the economy has started to slowly pick up again. “Quarterly evaluations show that the recession, as it is defined, is over,” Alexei Ulyukayev, Russia`s Minister of Economic Development, said at a meeting with European diplomats in Moscow last month. Foreign experts echoed his statement: the credit rating agency Standard and Poor`s reported 0.5 percent growth in the third quarter after almost four quarters of decline, and predicted that growth would continue. But Russian analysts remain cautious, warning that the crisis is not over yet and that there`s a long road ahead for the economy to get back to where it was in the late 2000s.
07.12.2015 20:33 OPEC Unshackled From Quota Could Add Millions of Barrels
OPEC`s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. “Everyone does whatever they want” now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It`s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya. “It means more OPEC oil next year,” Jamie Webster, a Washington-based oil analyst for IHS Inc., said of the organization`s Dec. 4 decision. “OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production.” Oil slumped 2.7 percent in New York on Friday after OPEC ended its meeting without specifying a new production quota, saying instead that it would keep output near current levels of 31.5 million barrels a day. Crude prices extended losses on Monday to a three-month low of $38.49 a barrel.
06.12.2015 19:04 The U.S. Economy Looks Great, Unless You`re a Manufacturer
On Friday the Labor Department announced that the U.S. economy had added more than 211,000 jobs in November, and that the unemployment rate held steady at 5% - below the post-war average of 5.8%. In recent months, job growth has been strong enough that the Federal Reserve appears convinced that it needs to raise interest rates to keep rising wages from sparking inflation. And the performance of the U.S. economy has been so strong relative to the rest of the world that it has sent the value of the dollar soaring more than 16% on a trade-weighted basis since the middle of last year. But not everyone is on the bandwagon just yet. At the National Competitiveness Forum this week in Washington, D.C., CEOs of some of the largest U.S. companies met to discuss what can be done to increase the competitiveness of American firms, and several expressed a different view of the economy from what we saw reflected in Friday`s jobs report and the subsequent stock market reaction.
04.12.2015 14:22 India`s Economy Grows 7.4%, Outperforming China
India`s economy grew by 7.4% year-on-year in the last quarter, according to official figures released Monday, outperforming China and giving Prime Minister Narendra Modi a boost following a recent election drubbing. Growth in the three months to the end of September quickened to 7.4% from 7.0% in the previous quarter, according to statistics ministry data, slightly ahead of analysts` expectations. India has now recorded three straight quarters of growth above 7%, performing better than its giant neighbor China on each occasion and leading the way for emerging markets with Russia and Brazil flagging. “China was the leader of economic growth across the globe for two decades or so until 2014,” said Sujan Hajra, chief economist at Anand Rathi Securities. “But India will now be the pace-setter for the next two to three years at least.” The figures for the second quarter of the financial year bettered China`s 6.9% increase in gross domestic product recorded for the same three months and reported by Beijing last month. They were also higher than the median forecast of 7.3% in a survey of economists by Bloomberg News.
03.12.2015 12:54 Credit Suisse: Ruble Overvalued As Crude Oil Prices Drop, Threatening Kremlin Budget And Recession
Russia needs to restock its national reserves to devalue its ruble currency, an analyst from Credit Suisse said Tuesday, as reported by Bloomberg. The value of the ruble has become inflated as the price of crude oil, one of Russia`s main exports, has dropped, and the country needs to devalue the currency to prevent an economic recession from deepening and deficits from widening, the analyst said. “The revenues from oil exports need to increase, and I don`t see any other solution but through devaluing the ruble,” said Valery Pushnya, Moscow-based head of emerging markets in Europe, the Middle East and Africa at Credit Suisse Group. The imbalance has reduced revenue for the government`s budget and could threaten a deficit, according to Pushnya. Amid Russia`s economie troubles, $1 has become the equivalent of 66.2 Russian rubles, compared with an average of 26.38 in recent decades and an all-time high of 72 in December 2014, Trading Economics reported. Other analysts have noted that the devalued ruble has helped exports, albeit with a lower value. "Russian production continued to accelerate as oil producers remained profitable even in the lower-oil-price environment, helped by the effect of a weak ruble on costs and lower taxes, which decline in a lower-oil-price environment," Bank of America Merrill Lynch stated in recent research, Reuters reported.
02.12.2015 12:37 The $30 Oil Cliff Threatening Russia`s Economy
For Russia, $30 is the number to watch. Crude prices at that level will push the economy to depths that would threaten the nation`s financial system, according to 15 of 27 respondents in a Bloomberg survey. Lower prices for the fuel are next year`s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts. “If oil prices fall lower and stay at that low level for longer, risks of fiscal and financial destabilization increase significantly,” Sergey Narkevich, an analyst at PAO Promsvyazbank in Moscow, said by e-mail. Russia, which has adjusted to the worst commodities slump in a generation with spending cutbacks and a weaker ruble, may be hard-pressed for policy answers if oil slumps further after losing more than a third of its value in the past year. While Brent, the European benchmark, is trading around $45 a barrel, a warmer-than-average winter could weaken heating-fuel demand enough to trigger a decline in the price of crude to $20, analysts at Goldman Sachs Group Inc. said in a note Nov. 18.