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15.08.2011 19:48 Japan`s GDP contracted for the third quarter in a row in Q2 2011

Japan`s GDP contracted for the third quarter in a row in Q2. It fell by 1.3% q/q AR (consensus: -2.5%, Danske Bank: -1.9%) compared with a 3.6% q/q AR contraction in Q1. The contraction was solely due to a supply-driven decline in exports. Net exports subtracted close to 4pp q/q AR from GDP growth in Q2. Domestic demand on the other hand actually managed to expand 0.9% q/q AR in Q2, albeit this was slightly less than we expected. The increase in demand has largely been satisfied by the continued increase in Japan’s imports and companies continuing to cut inventories, albeit inventories dropped substantially less than in Q1. Hence, inventories added close to 2pp q/q AR to GDP growth in Q2. The resilient Japanese imports in the wake of the earthquake have been quite remarkable. Japan’s imports improved 0.5% q/q AR in Q2 after increasing a solid 6.1% q/q AR in Q1. Hence, the expected sharp drop in Japan’s imports in the wake of the earthquake has never materialised, suggesting that the direct negative impact on demand outside Japan from the earthquake has actually been quite modest, because the lack of domestic supplies has to a large degree been substituted with increased imports.

13.08.2011 18:58 In June 2011 industrial production fell by 0.7% in the euro area and by 1.2% in the EU27

In June 2011 compared with May 2011, seasonally adjusted industrial production fell by 0.7% in the euro area (EA17) and by 1.2% in the EU27. In May production rose by 0.2% in both zones. In June 2011 compared with June 2010, industrial production increased by 2.9% in the euro area and by 1.7% in the EU27. These estimates are released by Eurostat, the statistical office of the European Union. In June 2011 compared with May 2011, production of durable consumer goods fell by 2.5% in the euro area and by 2.2% in the EU27. Capital goods decreased by 1.5% and 2.9% respectively. Intermediate goods declined by 0.6% in the euro-area and by 1.3% in the EU27. Non-durable consumer goods dropped by 0.5% and 0.8% respectively. Production of energy fell by 0.4% in the euro area, but gained 0.8% in the EU27. Among the Member States for which data are available, industrial production fell in fifteen, rose in five and remained stable in the United Kingdom. The largest decreases were registered in Denmark (-5.8%), Portugal (-3.5%), Finland (-3.3%) and Slovenia (-2.7%), and the highest increases in Latvia (+4.1%) and Lithuania (+3.7%). In June 2011 compared with June 2010, production of capital goods grew by 7.0% in the euro area and by 5.0% in the EU27. Intermediate goods increased by 3.3% and 2.3% respectively. Non-durable consumer goods rose by 1.2% in the euro-area and by 0.5% in the EU27. Durable consumer goods fell by 2.7% and 4.1% respectively. Production of energy decreased by 5.1% in the euro area and by 4.6% in the EU27. Among the Member States for which data are available, industrial production rose in thirteen and fell in eight. The highest increases were registered in Estonia (+23.7%), Latvia (+15.2%), Lithuania (+10.3%), the Czech Republic (+7.4%) and Germany (+7.0%), and the largest decreases in Greece (-13.2%), the United Kingdom (-5.3%) and Denmark (-3.3%).

06.08.2011 16:46 Standard & Poor`s downgraded the U.S.`s AAA credit rating for the first time since 1917

Standard & Poor`s downgraded the U.S.`s AAA credit rating for the first time, slamming the nation`s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits. S&P lowered the U.S. one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based firm said yesterday. Lawmakers agreed on Aug. 2 to raise the nation`s $14.3 trillion debt ceiling and put in place a plan to enforce $2.4 trillion in spending reductions over the next 10 years, less than the $4 trillion S&P had said it preferred. Even with the specter of a downgrade, demand for Treasuries surged as investors saw few alternatives amid concern global growth is slowing and Europe`s sovereign debt crisis is spreading. “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government`s medium-term debt dynamics,” S&P said in a statement late yesterday after markets closed. S&P`s action may hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation`s borrowing costs by $100 billion a year. The U.S. spent $414 billion on interest expense in fiscal 2010, or 2.7 percent of gross domestic product, according to Treasury Department data.

17.07.2011 13:55 Russian industrial production rose 5.3 percent in H1 2011 from a year earlier

Russia`s domestic economy is slowly coming to life, judging by the latest string of data from Russia`s statistical agency, Rosstat. Russian industrial production accelerated in June for the first time in five months as corporate investment rebounded. Output at factories, mines and utilities rose 5.7 percent from a year earlier, the most since February, after a 4.1 percent increase in May, the Federal Statistics Service in Moscow said. The median estimate of 14 economists in a Bloomberg survey was for an annual gain of 4.8 percent. In January-June Russian industrial production rose 5.3 percent from a year earlier. Barclays economist Vladimir Pantyushin writes from Moscow in a note to clients that the improvement has been entirely a product of manufacturing sectors — up 7.1% yoy versus 5.0% in May. Industrial manufacturing has been beating other manufacturing sectors over the last two years thanks to consumer demand. Export driven manufacturing sectors, as well as utilities, have decelerated to 1.6% and 1.5% yoy, respectively.

13.07.2011 21:17 China`s GDP growth rate slowed to 9.5 per cent in the second quarter of the year

China`s economy slowed down amid inflation concerns as its GDP growth rate slid to 9.5 per cent in the second quarter from 9.7 per cent in the first, while the economy in general expanded by 9.6 per cent in the first half of this year. China`s GDP growth rate slowed to 9.5 per cent in the second quarter of the year from 9.7 per cent in the first quarter, the National Bureau of Statistics said. The gross domestic product rose by 9.5 per cent in the second quarter, tapering off slightly from the 9.7 per cent growth rate posted in the first quarter, NBS spokesman Sheng Laiyun told a press conference. According to preliminary statistics, the country`s GDP reached 20.446 trillion yuan ($3.146 trillion) in the first six months, Sheng said. China`s economic performance was `generally good` and developed according to macro-economic regulation in the first half, he said. China`s consumer price index, the main gauge of inflation, rose 5.4 per cent year-on-year in the first half of this year, accelerating from 5 per cent in the first quarter of this year.

19.06.2011 13:55 The IMF expects global GDP to rise this year by 4.3%, down from its previous 4.4% estimate

The IMF cut its forecast for global economic growth, albeit slightly. The organization expects global GDP to rise this year by 4.3%, down from its previous 4.4% estimate. “The global economy, hit by slowdowns in Japan and the United States, is expected to reaccelerate in the second half of the year, but growth remains unbalanced and concerted policy action by major economies is needed to avoid lurking dangers,” the IMF advises. For the U.S., the new prediction calls for a 2.5% rise, down from a 2.8% forecast in April. That`s more or less what I`ve been expecting, which is to say growth of some degree. Not great, but enough to keep the macro demons at bay. Next week`s economic data updates may change my view, but as I`ve been discussing this week, the numbers for the U.S. still fall short of risking a new recession. The argument that`s it`s soft patch still look more compelling, if only moderately. Apparently the IMF agrees.

30.05.2011 23:05 Russia`s gross domestic product has grown 0.1 percent in April compared to March

Russia`s gross domestic product (GDP) has grown 0.1 percent in April compared to March. In the first quarter of 2011 Russia`s GDP has grown 4.1 percent year-on-year , the Federal Statistics Service (Rosstat) said. "In the first quarter of 2011, the physical volume of gross domestic product compared to the same period of 2010 amounted to 104.1 percent to preliminary estimates," the service said in a statement, adding that it will give more details about Russia`s Q1 GDP growth in the middle of June. However, the growth was slower than a previous forecast of 4.5 percent from the Economy Ministry. In April, Russian Prime Minister Vladimir said Russia`s GDP was projected to grow at 4.2 percent this year, adding that the forecast meant that by early 2012 "the Russian economy will fully recover losses caused by the crisis." In 2010, Russia recorded a 4-percent GDP growth after the worst recession in decades with its economy shrinking 7.9 percent in 2009.

15.05.2011 15:24 Eurozone GDP rose 0.8% in the first quarter of 2011 compared with the previous quarter

Eurozone GDP rose 0.8% in the first quarter of 2011 compared with the previous quarter, according to flash estimates published by Eurostat, the statistics office of the European Union. In the fourth quarter of 2010, growth rates were +0.3% in the Eurozone and +0.2% in the EU27. In Q1 2011, EU27 growth was also 0.8%. It was reported at the end of last month that US GDP in the quarter rose by 0.4%. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 2.5% in both the Eurozone and the EU27 in the first quarter of 2011, after +2.0% and +2.2% respectively in the previous quarter. During the first quarter of 2011, US GDP increased by 0.4% compared with the previous quarter (after +0.8% in the fourth quarter of 2010). Compared with the same quarter of the previous year, US GDP rose by 2.3% (after +2.8% in the previous quarter). American data is reported each quarter at an annualised rate. The German economy is regaining pace and the gross domestic product (GDP) rose 1.5% in the first quarter of 2011 on the previous quarter, as reported by Destatis, the German federal statistics office. The pre-crisis level of early 2008 has been exceeded. Meanwhile, France`s Institut national de la statistique et des études économiques (INSEE) reported that French GDP increased by 1.0% in volume terms after +0.3% in the previous quarter - - the steepest rise since 2006 Q2. There is no data for Ireland while Greece and Portugal had economic contractions at 4.8% and 0.7% respectively.

27.04.2011 14:04 Russian government approves of basic parameters of 2012-2014 economic forecast

The Russian government has approved of the basic parameters of the national social and economic development forecast for 2012-2014, Deputy Economic Development Minister Andrei Klepach told a news briefing on April 21th. He acknowledged that the considered options were below the potential the Russian economy might achieve. Klepach said that in 2012 GDP growth was expected at 3.5 percent, and "further on we may come close to 4.2-4.6 percent a year." Industrial production growth in 2012 should reach 8.8 percent, and in 2014, 9.6 percent. "Import will show outpacing growth," Klepach said. "This sort of economic growth suggests the real incomes of the population have been up by more than 4 percent over one year, which is slightly higher than the growth of the economy itself. In other words, the economy is becoming more socially oriented," he said. Klepach pointed to success in "significantly reducing the rate of growth in electricity prices." "But for the action taken, in 2011 it would almost touch 20 percent, while for the time being it is expected at 13-15 percent for end consumers," Klepach said. He added that "one of the options being considered would peg the prices of electricity, gas and rail transport to inflation." However, Klepach remarked that "this option has not been studied yet and research into it will take four to six weeks."

02.04.2011 11:27 The World bank lowered its forecast of Russia`s economic growth rates in 2011 to 4.4 percent

The government`s social spending measures appeared to bear fruit last year, resulting in declining poverty rates, although Russians are likely to face additional inflationary pressure ahead of the 2012 presidential elections, the World Bank said. The government should focus on controlling inflation in the short term, as the growth of budget expenditures is possible due to upcoming elections and preparations for the Sochi Olympics in 2014, the bank warned in a report.
According to the report, the government`s economic policy should be aimed at "a more ambitious fiscal adjustment and a long-term non-oil fiscal deficit of about 4.3 percent of gross domestic product," as the budget remains vulnerable to a sudden decline in oil prices.
Zeljko Bogetic, the World Bank`s leading economist for Russia, said efficient budget policy was crucial, since the Russian economy largely depended on oil prices. The country is facing a risk of returning to "the oil curse" with high oil prices resulting in "unjustified government expenditures, especially in the pre-election time," he told reporters at the bank`s Moscow office. The government should reduce the budget`s vulnerability to new spending by cutting the non-oil fiscal deficit, which currently stands at a very high level of 12.7 percent of GDP, Bogetic said, adding that the government`s current plan to reduce the budget deficit was "reasonable."
The World Bank supports the Finance Ministry`s recent initiative to put additional revenues coming from the oil and gas sector in reserve as a measure to lower inflation rates, said World Bank economist Sergei Ulatov. "We support this decision because it`s aimed to fulfill two tasks — first to lower inflation rates and second not to cause additional expenditures," Ulatov said.
Inflation stood at 8.8 percent in 2010, while the Central Bank expects that it will drop to 6 percent to 7 percent this year. "Inflation is Russia`s main problem in the short term," Bogetic said. He said inflation was not only a macroeconomic problem but a social one as well, because it resulted in serious pressure on real incomes for the middle and lower class. Low-income households were most affected by the surge in food prices, which caused a 5 percent drop in consumption, the report said.
However, the government`s social support measures, which included increasing pensions and wages in the public sector as well as unemployment benefits, resulted in the percentage of the population living below the poverty line falling from 13.2 in 2009 to 12.7 last year, it said. An impoverished person, according to the government figure, is anyone earning less than 5,902 rubles ($208) per month.
The World Bank expects a further decline of the poverty rate, which is likely to reach 11.2 percent this year and 10 percent in 2012 due to the positive economic growth rates and falling unemployment.
The bank lowered its forecast of economic growth rates in 2011 to 4.4 percent, compared with last year`s prediction of 4.5 percent. Bogetic said cutting inefficient expenditures was one possible way to reduce budget spending and prevent inflation growth. Additional funds, which will appear as a result of the move, could be used to finance "priority infrastructure projects," he said.
Upgrading transport and road infrastructure will require significant budget spending, while the funds currently appropriated for these purposes are not sufficient, the World Bank said. The government plans to spend a total of 644 billion rubles on upgrading transportation infrastructure this year, with 453 billion rubles being spent on road maintenance.


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