Global Economy Reviews

02.06.2007 14:32 World Economy Review - May 2007

A report by the Organization of Economic Cooperation and Development (OECD) published on May 24 says that the world economy is not in for a decline. Despite certain risks, it is growing faster than in the past.
In 2007 and 2008, the economy of the 31 OECD countries would experience a growth in GDP of 2.7%, according to the OECD forecast. Germany would continue to experience strong growth, with GDP set to expand by 2.9% in 2007, and there would be `soft landing` in the US after several boom years. Growth in the US economy was slowing down from 3.3% in 2006 to 2.1% in 2007. Predicted growth for 2008 was 2.5%. Thanks to recovery in Germany and Italy, the Euro zone would experience a growth rate of 2.7% in 2007. In 2008, the predicted growth of 2.3% was above potential growth of 2%.
The Germany economy`s expansion rate would be 2.2% in 2008, 0.6 percentage points above potential growth rate. Growth would remain solid in Japan for 2007, up to 2.4% compared to 2.2% in 2006. Growth in China and India would be buoyant, the report predicted. However, it also warned of risks posed by imbalances in current accounts and, possibly, in financial and housing markets.
The OECD also predicts that Russia will develop more slowly, but still faster than many other countries, and the growth of prices will be much less significant. They believe in 2007 Russia`s GDP will stand at 6.5%, which is the same as in the two previous years. But in 2008, the economic growth will slow down to 5.8%. The inflation, which will slow down to 6.5% for objective reasons by 2008, is making its own contribution to economic stability.

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02.05.2007 15:03 World Economy Review - April 2007

The International Monetary Fund`s World Economic Outlook (WEO), published in April of 2007, predicts that the average world growth rate of 4.9 percent in the period 2003-2006 will continue at least for the next two years.
The WEO forecast 2007-08 released by IMF the US economy growth is expected to come down to 2.2% this year, from 3.3 percent in 2006, which would be the slowest since 2002, when it was recovering from a recession.
Euro zone growth will slow a bit this year after a strong performance in 2006, but the European Central Bank should still lift interest rates to keep inflation at bay, the IMF said. The International Monetary Fund also said it was not clear if this showed a fundamental improvement in the common currency zone`s economic performance, and urged more reform to catch up with the wealthier United States.
"Growth in the euro area is projected to moderate to 2.3 percent in 2007 and 2008, still somewhat above potential," the IMF said in the spring edition of its World Economic Outlook. In its last forecast in September IMF expected Eurozone economies to collectively expand at a 2.0 percent pace this year and next.
Britain should see economic growth of 2.9% this year, also better than the IMF previously thought. Next year, growth in the country should slow a tad and clock in at 2.7%.
Japan continues to recover from a decade-long stagnation. It is expected to post economic growth of 2.3% this year, up a notch from 2.2% last year. Growth should fall back to 1.9%t next year. In China, the economy is expected to grow by around 10% in 2007.
Russia is expected to see economic activity increase by 6.4% this year, compared with 6.7% last year. In 2008, Russia`s economy is expected to grow by 5.9%.

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01.04.2007 16:21 World Economy Review - March 2007

The economic reports, which were published in March 2007, showed the World economy grew moderately in the fourth quarter of 2006.
So, the US economy grew at an annual rate of 2.5 percent in the fourth quarter, according to the "final" estimates released by the Bureau of Economic Analysis. The growth rate was 0.3 percentage point more than in the "preliminary" estimates released in February. In the third quarter, real gross domestic product grew 2.0 percent. For 2006, the annual growth rate was 3.3 percent, compared with 3.2 percent in 2005.
Euro area (EA12) and EU25 GDP both grew by 0.9% in the fourth quarter of 2006, compared to the previous quarter, according to first estimates released by Eurostat, the Statistical Office of the European Communities. In the third quarter of 2006, growth rates were 0.6 percent in both the euro area and the EU25. Compared to the fourth quarter of 2005, seasonally adjusted GDP rose by 3.3 percent in the euro area and by 3.4 percent in the EU25, after 2.7 percent and 3.0 percent respectively for the previous quarter.
The Japan`s economy grew 1.2 percent in real terms in the October-December period, an annualized rate of 4.8 percent, according to a preliminary government report. The quarterly rise marks the eighth straight quarterly increase since the January-March period in 2005, the Cabinet Office report showed.
The Russia`s economy grew 7.7 percent in real terms in the October-December period, according to a preliminary report of The Economy Ministry. In 2006, Russia`s GDP grew 6.8 percent.
Also, The Russian Economy Ministry has hiked the GDP forecast for 2007 by 0.1 percentage points from 6.1 percent to 6.2 percent. The inflation forecast for 2009 and 2010 was lowered from 5.5-6.8 percent to 5.5-6.5 percent and from 5.0-6.5 percent to 5-6 percent, respectively.

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02.03.2007 22:37 World Economy Review - February 2007

The International Monetary Fund said the world economy should hold up well in the face of a slowing U.S. economy and should grow by a solid 4.9 percent this year. China`s economy logged blistering growth of 10.7 percent in 2006 - the most since 1995. It is expected to slow somewhat to 9.8 percent this year, according to the country`s central bank.
Brian Bethune, economist at Global Insight, predicted China`s growth would have to slow much more - to around 6 percent or less - to precipitate major economic turmoil. "It would take a major slowdown to upset the Chinese applecart", - he said.
Economists put the odds of a U.S recession this year at about one in five. "It is very rare that business cycles die of old age. It is usually some shock that leads to recession," - said Carl Tannenbaum, chief economist at LaSalle Bank and president of the NABE.
The economy`s last recession in 2001 was preceded by the bursting of a stock market bubble in 2000 that wiped out trillions of dollars in paper wealth. Then came the 2001 terror attacks. The shock this time could come from the housing slump and from the surge in delinquencies and foreclosures for "subprime" borrowers - people with weaker credit records who are considered higher risks especially those who have adjustable-rate mortgages.
"While the probability of a recession is low, it does highlight that the economy will be vulnerable to any shock in 2007. It is worth thinking about and preparing for," - said Mark Zandi, chief economist at Moody`s Economy.com.
Meanwhile, Russia`s economics ministry said it has reduced its GDP growth forecast for 2007 to 6.1% from 6.2%, and for 2009 to 5.9% from 6%. The Economic Development and Trade Ministry also said it has left its GDP growth forecast for 2008 and 2010 unchanged - 5.9% and 6.1%, respectively. It also said inflation in Russia will be at 6.5-7.0% in 2008, 6.3-6.8% in 2009, and 5.8-6.5% in 2010.

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01.02.2007 20:30 World Economy Review - January 2007

The economic slowdown in the United States will weaken growth in the world economy from 3.8 per cent in 2006 to 3.2 percent in 2007, according to the Conference Board`s World Outlook - Winter 2007.
The United States is facing tumbling home sales nationally and falling prices in some parts of the country, as well as weaker vehicle and retail sales and orders of durable goods. The Conference Board`s U.S. Outlook - Winter 2007 forecasts that the U.S. economy will have a soft landing, although the odds of a hard landing have increased somewhat over the past 12 months. The United States is expected to avoid slipping into a recession because a weaker U.S. dollar will boost American exports and business investment will remain strong, leading to economic growth of 2.2 per cent in 2007.
After performing relatively well in 2006, economies in western Europe and Japan will weaken in 2007, dragging down global growth. Europe`s real gross domestic product (GDP) is expected to grow by two per cent in 2007, but tax increases in Germany and a stronger euro will negatively affect the short-term outlook. The slowdown in the United States will affect the Asia-Pacific region by slowing Asian exports and weakening real GDP growth from the 5.3 per cent recorded in 2006 to 4.6 per cent in 2007.
The United Nations has also predicted a deceleration of the world economy this year after three straight years of growth with American economy weakening dragged down by softening housing market. The growth of world gross product (WFP) is forecast to moderate its pace to 3.2 percent from estimated 3.8 percent during the last year. The report holds out the possibility of much stronger slowdown in American economy, leading to sustained risks. These include dollar losing its value too fast or inability of the United States to draw outside investments. The economic growth rate in Europe is expected to slow down to 2 percent and in Japan below 2 percent.

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