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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.

20.03.2011 15:12 The cost of the Japanese earthquake and tsunami to the country`s economy will be 2% of the country`s GDP

The Secretary General of the Organisation for Economic Co-operation and Development, Angel Gurria, says he believes the cost of the Japanese earthquake and tsunami to the country`s economy will be 2% of the country`s GDP. But he said he believed reconstruction could provide a boost to the economy and that it would be funded by the Japanese people. The head of the OECD said he was concerned that the nuclear crisis in Japan after last week`s earthquake could lead to an unmerited global backlash against nuclear power. China has suspended approvals for planned nuclear power plants while Germany has shut down its nuclear plants that began operating before 1980 in response to the emergency in Japan after last week`s quake and tsunami. "I`m worried there could be a backlash against the alternative of nuclear power and that it might be stopped or perceived to be wrong, without taking into account the exceptional circumstances," OECD head Angel Gurria told BBC radio. "We continue to believe that nuclear is part of the solution, not all of the solution, to fight climate change, but also to make sure we have enough electricity for the economy to work. "We should not allow this accident to deviate us from this conviction." Gurria, who has been visiting London to present a report on the British economy, said that the cost of rebuilding Japan would push up debt levels but that people were the priority. "I don`t think that when have we situations like this you should discuss too much the debt to GDP ratio, you just do what you have to do," he said. "The priority is to have people safe, provide them with what they need, then deal with the nuclear plant. In this case, it`s whatever it takes, people first. It means deficits may increase and it means it may take longer for the expected consolidation." Gurria said that Japan would absorb most of the cost thanks to its high domestic savings. "The insurance and reinsurance costs will be important, but most of the costs will stay in Japan itself," he said. "Nobody will lend Japan yen except the Japanese people.

07.03.2011 15:50 Brazil recorded a 7.5-per cent annual GDP growth in 2010 over the previous year

Brazil, Latin America`s largest and the world`s fifth-largest nation recorded a 7.5-per cent annual GDP growth in 2010 over the previous year, becoming the world`s seventh-largest economy surpassing Italy. According to latest data released by the Brazilian Institute of Geography and Statistics (IBGE), Brazil`s economy grew to 3.67 trillion Brazilian reals ($2.1 trillion) in 2010. Commenting on the strongest growth in 24 years, Brazilian president Dilma Rousseff said, "It`s a very reasonable number which shows Brazil has the capacity to grow." "The 2010 growth rates demonstrate that the Brazilian economy is growing at a significant and sustainable pace, which supports the country`s plans for long-term investment projects," the nation`s finance minister Guido Mantega said. "We expect GDP to grow around 4.5 to 5.0 per cent in 2011, a rate that would be sustainable and generate no inflationary pressures," Mantega further stated. The growth was led by the industry sector, which expanded 10.1 per cent, followed by the agriculture sector recording 6.5 per cent growth and services sector 5.4 per cent.

17.02.2011 21:26 Euro area GDP up by 0.3% and EU27 GDP up by 0.2% in the fourth quarter of 2010

GDP increased by 0.3% in the euro area (EA16) and by 0.2% in the EU27 during the fourth quarter of 2010, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the third quarter of 2010, growth rates were +0.3% in the euro area and +0.5% in the EU27. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 2.0% in the euro area and by 2.1% in the EU27 in the fourth quarter of 2010, after +1.9% and +2.2% respectively in the previous quarter. During the fourth quarter of 2010, US GDP increased by 0.8% compared with the previous quarter (after +0.6% in the third quarter of 2010), and decreased by 0.3% in Japan (after +0.8%). Compared with the same quarter of the previous year US GDP rose by 2.8% (after +3.2% in the previous quarter) and by 2.6% in Japan (after +4.7%). Over the whole year 2010, GDP increased by 1.7% in both the euro area and the EU27.

06.02.2011 14:52 The IMF upgraded the world GDP to expand by 4.4 percent instead of 4.2 percent this year and by 4.5 percent next year

Even as the global recovery continues to advance, the International Monetary Fund (IMF) believes that it still remains uneven as the growth in emerging markets, including the Philippines, would outpace the expansion in advanced economies particularly the US and Europe. In its latest World Economic Outlook released 25.01.2011, the IMF upgraded the world output as measured by the gross domestic product (GDP) to expand by 4.4 percent instead of 4.2 percent this year and by 4.5 percent next year. The institutional lender expects the global GDP to expand by 5.0 percent last year after contracting by 0.6 percent in 2009. The IMF raised the GDP growth target of advanced economies including the US, Euro area, Japan, United Kingdom, Canada and other countries by 0.3 percent to 2.5 percent instead of 2.2 percent this year after expanding by 3.0 percent. The output of advanced economies contracted by 3.4 percent in 2009. IMF said the projected growth this year and next year in advanced economies is still sluggisg considering the depth of the 2009 recession and insufficient to make a significant dent in high unemployment rate. For emerging and developing markets, the IMF upgraded the GDP growth target to 6.5 percent instead of 6.4 percent this year and 6.5 percent for next year. The GDP in emerging and developing economies zoomed to 7.1 percent last year from 2.6 percent in 2009. In Asia, IMF said the growth of China would ease to 9.6 percent this year from 10.3 percent last year while the growth in India would also slowdown to 8.4 percent from 9.7 percent. In both 2011 and 2012, growth in emerging and developing economies is expected to remain buoyant at 6.5 percent, a modest slowdown from the 7 percent growth registered last year and broadly unchanged from the October 2010 WEO. Growth in Southeast Asia that includes Indonesia, Malaysia, Philippines, Thailand, and Vietnam is also expected to ease to 5.5 percent this year from 6.7 percent last year.

29.01.2011 15:34 US GDP grows at 3.2 percent in fourth quarter of 2010

The US economy accelerated in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years. Gross domestic product grew at a 3.2 per cent annual rate, Commerce Department figures showed today in Washington, falling short of the 3.5 per cent median forecast of 85 economists surveyed by Bloomberg News because of a slowdown in inventories. Excluding stockpiles, the economy rose at a 7.1 per cent pace, the most since 1984. For all of 2010, the world`s largest economy expanded 2.9 per cent, the most in five years, after shrinking 2.6 per cent in 2009. The volume of all goods and services produced rose to $13.38 trillion, for the first time surpassing the pre-recession peak reached in the fourth quarter of 2007.

15.01.2011 21:00 US industrial production increased 0.8 percent in December 2010

US industrial production sharply rebounded 5.8 percent in 2010 from a slump the prior year, with December output jumping 0.8 percent, double expectations, official data showed. The December increase followed a 0.3 percent rise in the industrial production index in November, the Federal Reserve reported. The full-year advance of 5.8 percent in industrial production marked a turnaround but not a complete recovery from the 9.3 percent plunge in 2009 as the economy struggled to exit recession. The Fed`s 2010 index figure still was 5.0 percent below its level before the 2008-2009 recession. In December, output was boosted by a 4.3 percent rise in energy production "as unusually cold weather boosted the demand for heating," the central bank said. "Industrial production, led by manufacturing and mining, finished the year on a strong note and is poised to sustain growth in 2011,” said Thomas J. Duesterberg, CEO of the Manufacturers Alliance/MAPI. "Expansion in manufacturing was led by information processing equipment, up 14% for the year and 1.8% in December, machinery, up over 15% for the year and over 4% for the final quarter, and plastics, up over 9% for the year and 1.5% in December. "Looking ahead, improving consumer spending, strong export markets, and the need for capital spending to replace worn out equipment should drive further growth. Some specific areas to look for improved performance in 2011 are: aerospace, where production was down by 0.1% last year, as new and improved large commercial aircraft models go into full production; the auto sector, where stronger consumer spending, attractive new models and an aging car fleet suggest continued growth; and mining and oil and gas equipment, a sector where global demand is accelerating and the United States has a competitive advantage."

10.01.2011 15:02 China`s economy grew by around 10 percent in 2010

China`s economy grew by around 10 percent in 2010, with retail sales up 18.5 percent, showing that it is now relying more on domestic consumption, Vice Premier Li Keqiang said in remarks published on January 08th. "The driving force of domestic consumption is rising, and its increase contributed over 90 percent to economic growth (in 2010)," Li told business leaders in Berlin, according to a transcript of his speech published in the official People`s Daily. "We have the confidence, conditions and capability to maintain long-term stable and fast economic growth," he said. Central bank governor Zhou Xiaochuan also said this week that gross domestic product grew by around 10 percent in 2010. Li added that China aimed to expand domestic consumption and enable its people to enjoy a greater share of the fast growth in the next five years. He also voiced confidence Europe could overcome its sovereign debt crisis, saying Beijing was paying attention to it and would offer its support. China has publicly promised to buy government debt from Greece and Spain, but has abstained from providing specific values for its investments.

20.12.2010 22:05 Russia Industrial Output and Factory Prices Surge In November 2010

Russian industrial output growth accelerated to a three-month high in November, data from the Federal Statistics Service showed. At the same time, Russia`s industrial producer prices climbed twice as fast as in the previous month. Production rose 6.7% year-on-year in November compared to 6.6% growth in the previous month. On a monthly basis, output edged up 0.1%. After adjusting to seasonal and calender variations, the output remained 0.2% above October`s level. During the January to November period, production increased 8.4% compared to the same period last year. Manufacturing output climbed 10.1% annually in November, faster than the 9.9 growth in the previous month. Mining output grew 2%, while production and supply of electricity, gas and water was up 0.1%. In another report, the statistical agency noted that Russia`s factory prices rose 4.4% month-on-month in November, compared to 2.2% increase in October. Annually, prices surged 16% compared to 6.5% rise a year ago.

11.12.2010 19:17 Japan`s economy grew a revised 1.1 percent in July-September 2010

Japan`s economy grew a revised 1.1 percent in July-September from the previous quarter, exceeding an initial government estimate, but that offered little comfort to policymakers wary of slowing growth in the current quarter. The revised GDP translates into annualised growth of 4.5 percent, exceeding an initial reading of 3.9 percent and above the 4.1 percent rate expected by economists, due to upward revisions in capital spending and inventories. Japan`s revised GDP data showed capital spending up 1.3 percent in July-September from the previous quarter, compared with the preliminary 0.8 percent increase and a 1.4 percent gain expected by economists. Personal consumption was revised slightly upward to a 1.2 percent gain, against an initial reading of 1.1 percent. Analysts polled by Reuters expect the economy to shrink 0.1 percent this quarter as exports slow and auto output slumps after the expiry of government incentives for purchases of low-emission cars.

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