The Lastest Macroeconomic News
15.06.2009 21:51 Russian GDP Shrank 9.8% in First Quarter of 2009 on Industrial Output
Russia’s economy contracted the most in 15 years in the first quarter after industrial production plunged and the government’s 3 trillion rubles ($97 billion) in stimulus spending failed to boost companies and banks. Gross domestic product tumbled an annual 9.8 percent, compared with growth of 1.2 percent in the previous quarter, the Moscow-based Federal Statistics Service said in a statement on its Web site today. The preliminary estimate on May 15 was a 9.5 percent contraction. The world’s biggest energy supplier is falling into its first recession in a decade after the global slowdown sapped demand for its commodities and companies struggled to find funds. The government’s stimulus package has failed to spur bank lending, even as the central bank cut its main interest rates three times since April. Manufacturing fell 23.5 percent in the first quarter, compared with a revised 6.6 percent expansion in the same period last year. GDP may slump as much as 8 percent in 2009, Economy Minister Elvira Nabiullina said last month, after growth of 5.6 percent in 2008 and 8.1 percent the year before. President Dmitry Medvedev said on June 6 that the Russian economy will rebound “more quickly than had perhaps been expected.” The economy contracted in May at the slowest pace since October, shrinking 6.8 percent from a year earlier, as slumps in manufacturing and service industries eased after record declines in April, according to VTB Capital’s GDP indicator, a gauge of economic growth, published on June 4. Rising crude oil prices will help the country narrow its budget shortfall and reduce the use of the Reserve Fund, one of its two sovereign wealth funds, Prime Minister Vladimir Putinsaid during a meeting in Moscow on June 9. The deficit, Russia’s first in a decade, may reach 10 percent of GDP this year, according to the Finance Ministry. The Reserve Fund may be exhausted by the end of next year, Finance Minster Alexei Kudrin said. Goldman predicts a contraction of 7.5 percent in GDP this year, while the International Monetary Fund on June 1 said it expected the economy to shrink 6.5 percent. Alfa Bank, Russia’s largest privately owned bank, expects the economy to contract 5.7 percent.
08.06.2009 22:12 Russia`s foreign trade surplus fell to $31.3 billion in January-April
Russia`s foreign trade surplus fell to $31.3 billion in January-April from $70.1 billion in the same period a year ago, the Federal Customs Service said. It provided the following data: Exports $77.8 billion (-47.7 percent y/y), Imports $46.5 billion (-40.9 percent y/y). Central Bank data already released, the trade surplus fell to $6.7 billion in April alone from $6.8 billion in March and $14.8 billion in April 2008. Russia`s Central Bank estimates that the country`s net trade surplus for the period January-May 2009 was $35 billion, the bank`s deputy chairman told journalists at the St. Petersburg economic forum on Saturday. Alexei Ulyukaev also said that the Central Bank had purchased less than $1 billion to restrain the ruble on the exchange market, which was also lower than the period February 1 - May 25 when the bank spent more than $30 billion on strengthening the ruble. The top bank official predicted that Russia could move towards a free floating regime for the ruble in 2010, but only if conditions were suitable, including an acceptable balance of payments and a mechanism allowing the system to be regulated through interest rates. "I wouldn`t rule out 2010," Ulyukaev said, "We have a much more liberal system now that a year ago. We have an extremely wide corridor [currency basket] 26-41 rubles." He also dismissed reports that the Central Bank had stress-tested the Russian banking system. "We have not carried out a stress test, and have no negative information. We think that the situation with the banking system is completely acceptable," Alexei Ulyukaev said.
27.05.2009 21:16 Russia`s GDP Dropped 10.5 percent in April 2009
The Russian federal government now believes the country`s GDP in 2009 will shrink between six and eight percent. In April, the GDP dropped 10,5 percent. Deputy Minister of Finance Andrey Klepachsaid that the decline in Russian GDP in the four first months of 2009 totaled 9,8 percent. In April, the drop was 10,5 percent. The official still highlighted that the drop in April was lower than in March and that the 2009 might see a total decline of 6-8 percent. The main negative issue is the decline is investments, which totaled 15,2 percent and in April and 15,8 percent over the last four months. Mr. Klepach also said that his ministry expects a 9 percent budget deficit this year, the news site informs. In his forecast presented to government and the countries federal assemblies, Russian President Dmitry Medvedev said the Russian budget deficit in 2010 will continue to drop to an estimated seven percent.
19.05.2009 21:18 Industrial production in Russia dropped 14.9% in the January-April period
Industrial production in Russia dropped 16.9% year-on-year in April, faster than a 13.7% fall in March, the Federal State Statistics Service said. Economists expected a decline of 14%. Industrial output dropped for the sixth consecutive month in April. Month-on-month, industrial output slipped 8.1% in April, following an 11.1% growth in the previous month. In the January-April period, industrial production dipped 14.9% compared to the same period in the previous year.Rosstat bases its manufacturing output index on data from the resource extraction (mining) and manufacturing sectors, and includes the production and distribution of electricity, gas and water. The metric showed that the first quarter of 2009 stood at 85.1 percent over the previous year. Output in April 2009 was 83.1 percent from April 2008, and was down from March 2009 by 8.1 percent. Similarly, a report on the state of the economy published on May 15th showed that GDP had fallen 9.5 percent year-on-year in the first quarter. The International Monetary Fund predicted last month that Russian GDP would fall 6 percent in 2009.
16.05.2009 14:55 Euro area and EU27 GDP down by 2.5% in the first quarter of 2009
GDP declined by 2.5% in both the euro area (EA16) and the EU27 during the first quarter of 2009, compared with the previous quarter, according to flash estimates published by Eurostat, the Statistical Office of the European Communities. In the fourth quarter of 2008, growth rates were -1.6% in the euro area and -1.5% in the EU27. Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 4.6% in the euro area and by 4.4% in the EU27 in the first quarter of 2009, after -1.4% in both zones in the previous quarter. During the first quarter of 2009, US GDP decreased by 1.6% compared with the previous quarter, after -1.6% in the fourth quarter of 2008. US GDP decreased by 2.6% compared with the same quarter of the previous year (-0.8% in the previous quarter). In March 2009 compared with February 2009, seasonally adjusted industrial production fell by 2.0% in the euro area (EA16) and by 1.9% in the EU27. In February production decreased by 2.5% and 2.2% respectively. In March 2009 compared with March 2008, industrial production declined by 20.2% in the euro area and by 18.8% in the EU27. In March 2009 compared with February 2009, production of capital goods fell by 0.5% in the euro area and by 1.3% in the EU27. Non-durable consumer goods decreased by 1.0% and 0.5% respectively. Durable consumer goods dropped by 2.5% in the euro area and by 1.8% in the EU27. Energy declined by 2.8% and 3.1% respectively. Intermediate goods fell by 3.1% in the euro area and by 2.7% in the EU27. Among the Member States for which data are available, industrial production rose in five and fell in fourteen. The highest increases were registered in Portugal (+3.1%) and Finland (+2.2%), and the most significant falls in Luxembourg (-7.2%), Lithuania (-6.3%), Italy (-4.6%) and Spain (-3.5%). In March 2009 compared with March 2008, production of non-durable consumer goods fell by 7.2% in the euro area and by 5.3% in the EU27. Energy decreased by 9.2% and 9.0% respectively. Durable consumer goods declined by 23.2% in the euro area and by 20.5% in the EU27. Capital goods dropped by 23.5% and 23.0% respectively. Intermediate goods fell by 27.0% in the euro area and by 25.6% in the EU27. Industrial production fell in all Member States for which data are available. The largest decreases were registered in Estonia (-29.7%), Luxembourg (-29.6%), Spain (-24.7%) and Italy (-23.8%), and the smallest in Greece (-5.8%), Portugal (-7.9%) and Poland (-10.0%). Euro area1 annual inflation was 0.6% in April 2009, unchanged compared with March. A year earlier the rate was 3.3%. Monthly inflation was 0.4% in April 2009. EU annual inflation was 1.2% in April 2009, down from 1.3% in March. A year earlier the rate was 3.6%. Monthly inflation was 0.3% in April 2009.
12.05.2009 20:48 IMF said Europe must do more to exit recession in 2010
Europe should take bolder steps to fix its banks, starting with stress tests of vulnerability, and better coordinate national policies to improve chances of the region shaking off recession during the course of 2010, the International Monetary Fund said. A report from the Washington-based agency, which has provided economic rescue funds for emerging market European countries hit hardest by the global financial crisis, stressed the need for Europe to adopt policies that helped west and east. "Europe is facing the economic storm of a lifetime and it urgently needs to weatherproof its institutions," Marek Belka, who is head of the IMF`s European department, and presented the publication in Paris, said. ECB interest rates cuts had probably gone about as far as was useful, or near in any case, said Belka, whose main point was to stress the IMF`s call for measures to restore confidence in the banking system, starting with stress tests. "We are coming quite close to the point where the efficiency of interest rate actions is exploited," said Belka. The IMF report repeats the macroeconomic forecasts contained in the IMF`s April 22 World Economic Outlook. It foresees deep recession in 2009 and flat to sub-zero growth for 2010 as a whole despite a pickup that should take place as long as government measures are effective. It sees both advanced and emerging economies in deep contractions in 2009 but the emerging market region returning to growth for 2010 as a whole while advanced economies still struggle, if much less so than this year. The IMF said fiscal stimulus should continue in 2010 and focus on infrastructure and direct transfers rather than tax breaks and subsidies for companies and consumers. "Crisis measures, regulatory, and supervisory actions have been unhelpfully diverse especially in Europe`s well-integrated financial sector," the IMF said.
06.05.2009 21:03 Russia`s foreign trade surplus fell to $23.4 billion in January-March 2009
Russia`s foreign trade surplus fell to $23.4 billion in January-March 2009 from $53.7 billion in the same period a year ago, the Federal Customs Service said. It provided the following data: exports fell 47.6 percent to $56.9 billion, imports fell 39.0 percent to $33.5 billion. The Bank of Russia expects the trade surplus to exceed $50bn in 2009, First Deputy Chairman of the Central Bank Alexei Ulyukayev told a Russian banking conference in Moscow on May 6th. "We expect a significant decrease in imports as a result of the ruble`s devaluation effect. With this in mind, the trade surplus will be significant and may even top $50bn," he observed. Russia`s February inflation proved to be lower than in a number of European countries, according to the Russian Federal State Statistics Service`s (Rosstat) report on the increase in consumer prices based on the publications by Eurostat and national statistics services. According to Rosstat`s data, Belgium accounted for the highest inflation among European countries with 2.3 percent in February. Meanwhile, inflation stood at 1.8 percent in Luxemburg, and 1.1-1.5 percent in Belarus, Ukraine and Latvia. At the same time, consumer prices went down in Greece, Estonia and Turkey 1.1-0.3 percent in February compared to the previous month. In Russia, the prices for products and services edged up 1.7 percent compared to January and 4.1 percent compared to December 2008.
29.04.2009 21:35 U.S. Economy Shrank at 6.1% Rate in First Quarter of 2009
The slumping U.S. economy barely improved early this year, with businesses slashing spending and inventories, according to a surprising report indicating the recession didn`t ease as much as expected. Gross domestic product decreased at a seasonally adjusted 6.1% annual rate January through March despite rising consumer spending, the Commerce Department said Wednesday in its first estimate of first-quarter GDP. The 6.1% drop was much bigger than Wall Street expected and hardly different than a 6.3% plunge in the fourth quarter, when the recession that began in December 2007 deepened. Economists surveyed by Dow Jones Newswires expected a 4.6% drop in GDP during the first three months of 2009. With a 0.5% drop in the third quarter, GDP has now fallen three consecutive quarters. That hasn`t happened in 34 years, since third-quarter 1974 through first-quarter 1975. Price indicators within Wednesday`s report suggested inflationary pressures rose in first-quarter 2009, easing fears of deflation. For instance, the price index for personal consumption expenditures fell by 1.0%, a decline much smaller than the fall of 4.9% in the fourth-quarter 2008. The PCE price gauge excluding food and energy rose 1.5%, after increasing 0.9% in the fourth quarter. GDP acts as a scoreboard for the economy by measuring all goods and services produced. Its biggest component is consumer spending, which accounts for about 70% of GDP. First-quarter spending increased 2.2%, after dropping 4.3% in the fourth quarter. Purchases of durable goods rose 9.4% in the first quarter, after decreasing by 22.1% October through December. First-quarter non-durables spending climbed by 1.3%. Services spending rose 1.5%. International trade boosted the economy early this year, adding 1.99 percentage points to GDP. U.S. exports plunged 30.0% and imports decreased 34.1%. In the fourth quarter, trade deducted 0.15 of a percentage point out of GDP; exports in that period were 23.6% lower and imports fell by 17.5%.
27.04.2009 16:05 International Monetary Fund revises growth forecasts down significantly
The latest forecast by the IMF in its World Economic Outlook shows the global economy contracting in 2009 by 1.3%. While the rate of contraction should moderate from the second quarter of 2009 onward, output per capita is projected to decline in countries representing three-quarters of the global economy. Growth is projected to reemerge in 2010, but at 1.9% it would be sluggish relative to past recoveries. IMF Chief Economist Olivier Blanchard told reporters that the world economy was being battered by competing crosscurrents, with the collapse in confidence and demand continuing to pull the economy down and government stimulus measures and natural stabilization mechanisms pulling the economy up. “This is not the time for complacency, and the need for strong policies, both on the macro and especially on the financial fronts, is as acute as ever. But, with such policies in place, there is light at the end of this long tunnel. World growth can turn positive by the end of this year, and unemployment can start decreasing by the end of next year.” The IMF experts revised their January forecasts down significantly, particularly for the export nations Germany and Japan, namely, by over three percentage points. The IMF is predicting that growth in Germany will decline by 5.6% in 2009, whereas the six German economic research institutes, which have also published their forecasts, are expecting a drop of –6%. The forecasts are thus getting closer to our prediction of –7%. Eurozone GDP is expected to shrink by 4% this year, and to contract further by 1% in 2010. In comparison, the figures for the US appear almost upbeat: there, the IMF is expecting GDP contraccontraction of “only” 2.8% in 2009, and stagnation next year. The United Kingdom`s economy was forecast to shrink by 4% in 2009 and the United States by 2.8%.
20.04.2009 20:42 Industrial production in euro area fell by 2.3% in February 2009
In February 2009 compared with January 2009, seasonally adjusted industrial production fell by 2.3% in the euro area (EA16) and by 1.9% in the EU27. In January production decreased by 2.4% and 2.3% respectively. In February 2009 compared with February 2008, industrial production declined by 18.4% in the euro area and by 17.5% in the EU27. These estimates are released by Eurostat, the Statistical Office of the European Communities. In February 2009 compared with January 2009, production of energy fell by 1.0% in the euro area and by 1.3% in the EU27. Non-durable consumer goods decreased by 1.4% and 1.1% respectively. Intermediate goods dropped by 2.4% in the euro area and by 2.0% in the EU27. Capital goods declined by 3.0% and 2.3% respectively. Durable consumer goods fell by 4.3% in the euro area and 2.9% in the EU27. Among the Member States for which data are available, industrial production fell in sixteen and rose only in Portugal (+2.4%), Greece (+1.7%) and Poland (+0.4%). The most significant falls were registered in Lithuania (-4.1%), Estonia (-3.6%), Italy (-3.5%) and Germany (-3.2%). In February 2009 compared with February 2008, production of energy fell by 3.6% in the euro area and by 3.5% in the EU27. Non-durable consumer goods decreased by 6.3% and 5.4% respectively. Durable consumer goods declined by 22.1% in the euro area and by 21.0% in the EU27. Intermediate goods dropped by 24.2% and 23.7% respectively. Capital goods fell by 24.7% in the euro area and by 23.7% in the EU27. Industrial production fell in all Member States for which data are available. The largest decreases were registered in Estonia (-30.2%), Latvia (-24.2%) and Spain (-22.0%), and the smallest in Greece (-4.9%), the Netherlands (-5.9%) and Denmark (-11.8%).