The Lastest Macroeconomic 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.
30.11.2015 13:49 Four reasons Russia and Turkey can`t afford a trade war
A war of words has erupted after Turkey shot down a Russian warplane on November 23. Russian President Vladimir Putin called the downing of the jet a "stab in the back by the terrorists` accomplices." His Turkish counterpart Recep Tayyip Erdogan accused Moscow of deceit, and described Putin`s comments as a "huge mistake" in an interview with CNN. Russian officials are drawing up possible retaliatory economic sanctions against Turkey. But a trade war would cost both sides dearly. Here`s why: 1. Russia has few friends. 2. A strategic energy link. 3. Tourist traffic. 4. Both need all the help they can get.
28.11.2015 14:44 This is how Russia could hurt Turkey`s economy
Russia and Turkey have a raft of strategic and commercial trade deals in place which could be at risk as the diplomatic row over Turkey`s downing of a Russian warplane continues. Geopolitical tensions between Russia and NATO member Turkey have risen this week after a Russian SU-24 warplane was shot down by a Turkish F-16 fighter jet on Tuesday. Turkey said the jet was in Turkish airspace and ignored warnings to leave, Russia denies this. Since the incident a war of words has broken out between the two countries over who was at fault and Russia has threatened to retaliate on an economic level. On Wednesday, Russian Prime Minister Dmitry Medvedev said Turkey`s actions could result in the scrapping of joint projects and that Turkish companies could lose Russian market share. On Thursday, Medvedev appeared to harden his stance against Turkey, ordering the government to draw up measures which could include freezing some joint investment projects with Turkey, Reuters reported. These could also include restrictions on food imports, he said. Erdogan responded by saying such talk was "emotional" and "unfitting for politicians," Reuters reported. He added that he was saddened by such statements from Russia. This could be significant for both countries, Turkey is Russia`s second most important trading partner after Germany and, if Russia goes ahead and cuts economic ties, both countries will feel the effects, analysts warn. CNBC looks at the economic ties that bind Russia and Turkey and the potential impact of the relationship going sour.
26.11.2015 12:25 US Economy: 2015 will be another year of only modest growth
The U.S. economy grew slightly faster in the summer than previously reported, mainly because of a less severe slowdown in businesses stockpiling. The overall economy, as measured by the gross domestic product, grew at an annual rate of 2.1 percent in the July-September period, the Commerce Department reported Tuesday. That is better than its previous estimate of 1.5 percent growth. Even with the revision, economic growth slowed sharply from a 3.9 percent gain in the second quarter. The economy then was rebounding from a harsh winter that had sapped first quarter growth to a barely discernible 0.6 percent pace. "Growth is now averaging 2.2 percent for the first three quarters of the year and fourth-quarter estimates are in the range of 2 percent to 2.5 percent. Thus, 2015 will end up being more of the same in terms of the pace of the expansion which is now in its 7th year," Peter Boockvar, chief market analyst at the Lindsey Group.
25.11.2015 22:15 Russia`s economy stabilizing
There are tentative signs of economic stabilization in Russia, the International Monetary Fund said in a report released late on Monday. "The Russian economy is expected to contract by 3.8 percent in 2015, followed by a milder contraction of 0.6 percent in 2016, due to the headwinds from lower oil prices," the report said. Russian trade is improving despite low oil prices, according to the report. "The current account adjustment is progressing rapidly, supporting the ongoing external deleveraging process," the report said. The IMF predicts that inflation will decline to 12.7 percent at the end of 2015, and, in the absence of shocks to international oil prices, to continue to fall further during 2016. Currently inflation in Russia is at an annual 15.7 percent. “Monetary policy has been appropriately on hold, but normalization can resume once underlying inflation and inflation expectations are firmly on a declining path. The pace of easing should be balanced against external risks and the need to build credibility under the newly introduced inflation targeting regime," the report said.
25.11.2015 11:48 Ad Industry Accounted for 19 Percent of U.S. GDP in 2014
For anyone down on advertising, the Association of National Advertisers and The Advertising Coalition commissioned a study that highlights some of the industry`s big economic benefits. Namely, advertising contributed $3.4 trillion to the U.S. GDP last year, a figure that accounts for 19 percent of the country`s entire economic output. The study, done in partnership with IHS Economics & Country Risk, was also designed to analyze the impact a recent tax proposal would have on the U.S. economy. The proposal would allow businesses to deduct 50 percent of their annual advertising spending. "This new study underscores the essential nature of advertising in promoting both business and economic growth in this country. The very fact that this industry contributes nearly 20 percent to the nation`s GDP sends a powerful reminder to policymakers that advertising is an essential stimulus to the U.S. economy that should be promoted and not subjected to tax," Bob Liodice, president and CEO of ANA, said in a press release.
24.11.2015 12:45 Brazil`s economy takes the good with the bad
Brazil`s president is battling scandal and low poll numbers, inflation and unemployment are soaring, and ratings agencies are taking the knife to its credit rating. Is there any good news investors can count on from Latin America`s largest economy? There are some bright spots, analysts say. Yet for now, the immediate term outlook is overwhelmingly grim for the country that put the `B` in the acronym BRICS - shorthand for the most attractive emerging market economies investors once considered a sure bet. As Brazilian president Dilma Rousseff combats a slumping economy and corruption accusations, the country`s inflation surged above 10 percent while unemployment jumped to 7.9 percent, according to the latest official data. The dour state of affairs has Barclays forecasting a 4 percent economic contraction this year, followed by 3.3 percent shrinkage next year, the investment bank said in a research note last week. The political and economic turmoil has recently driven the real, Brazil`s currency, to multiyear lows, a factor helping to stoke price pressures.
22.11.2015 13:01 Commodity demand: Past, present, future
Over the past 15 years, China`s impact on global raw material demand has been nothing short of phenomenal. The spectacular growth in commodity demand between 2005 and 2010 led to the term “commodity supercycle”. However, this was no ordinary commodity cycle, as the nation with a population of more than 1 billion people rapidly urbanized. Today, despite the slowdown in commodity demand since 2011, there are still many analysts who have the firm conviction that the world remains in a commodity supercycle and that the globe is currently experiencing a pause before the acceleration in the demand for commodities resumes. Bearing these views in mind, as well as the current impact on global markets being caused by China`s growth slowdown, it is worth taking a moment to review the impact of China`s industrialization and the rapid increase in commodity demand in the past. Equally important is taking stock of current commodity demand fundamentals and looking to the future and China`s likely impact on commodity demand.
20.11.2015 12:31 APEC 2015: Micro enterprises, innovation take center stage
The Asia-Pacific Economic Cooperation (APEC) capped off a year`s worth of focusing on policies to support micro and small to medium enterprises (MSMEs) with a summit designed to tackle some of the current trends that can inspire entrepreneurs. The summit entitled "Innovation and Big Ideas: Pushing boundaries” was held on Nov 16, a day ahead of the center piece meeting to be attended by APEC economy leaders. Promoting MSMEs has been a central feature of the country`s APEC hosting this year, which revolved around the theme of inclusive and sustainable growth. These small businesses, which make up 99.7% of APEC economies, have been identified by the APEC Business Advisory Council (ABAC) as key to tapping into inclusive growth. “Unlocking the remarkable potential of entrepreneurs needs robust innovation ecosystems. MSMEs are oftentimes better poised to understand new customer expectations and create transformational business models through innovation,” said Doris Magsaysay-Ho, 2015 ABAC Chair. The article contains some of the ideas discussed at the summit.