The Lastest Macroeconomic News
15.11.2008 11:53 The economy of the euro zone slipped into recession for the first time in the third quarter
The economy of the euro zone slipped into recession for the first time in the third quarter, the European Union`s statistics agency said, as the financial crisis continued to depress manufacturing activity and consumer demand. The economy in the 15 countries that use the euro shrank 0.2 percent in the third and second quarters from the quarter before, further stoking expectations that the European Central Bank will cut interest rates to try to limit the damage. The weakness in the third quarter was particularly marked in Germany and Italy, both of which have entered a recession with gross domestic product contractions of 0.5 percent from the previous quarter after a similar decline in the second period. France`s economy grew 0.1 percent. Spanish GDP also fell, by 0.2 percent, posting the first quarterly decline since 1993. Dutch GDP was flat, after also stagnating in the second quarter. Outside of euro countries, British growth was down 0.5 percent after a flat reading the previous quarter. "The euro zone is not immune to what`s going on in the world economy generally, and exporting nations, like Germany, are totally plugged into the fortunes of the world economy," said Neil Mackinnon, chief economist at ECU Group. "We`re in for a pretty severe economic slump." Compared with the quarter a year earlier, GDP grew 0.7 percent in the euro zone and 0.8 percent for the 27 countries of the European Union. But economists said that a further contraction in euro zone GDP this quarter seems virtually assured and that the downturn is likely to endure well into next year. The European Commission forecasts that the aggregate budget gap of the euro countries would rise to 1.8 percent of gross domestic product in 2009 from 1.3 percent seen this year and to 2.0 percent in 2010, unless policies change. They also supported the Commission`s estimate that euro zone economic growth would slow to a mere 0.1 percent next year from 1.2 percent expected in 2008 in the wake of the financial crisis. The economy of the euro zone is to shrink 0.1 percent in quarterly terms in the fourth quarter, it said, and warned that further worsening in financial markets could push the euro zone into outright recession.
11.11.2008 21:01 Japan`s economy is teetering on the edge of recession
Economists say Japan, the world`s second-biggest economy, is teetering on the edge of recession. Third-quarter gross domestic product figures are due out Nov. 17. Central bank Deputy Governor Hirohide Yamaguchi promised lawmakers that the Bank of Japan, which cut its benchmark rate to 0.3 percent from 0.5 percent on Oct. 31, will stay focused on downside risks to the economy. "It will take a significant time before conditions for Japan`s economic recovery fall into place," Yamaguchi told an upper house parliamentary committee. Japan`s trade surplus has all but evaporated in the past couple of months, as high prices of oil and other raw materials boosted the value of imports, while exports languished as the global economy weakened in the face of its worst crisis in decades. The current account surplus in September fell 49 percent from a year earlier to 1.5 trillion yen ($15 billion), the finance ministry said. Japan`s economy shrank at the fastest pace in seven years in the second quarter, and some economists think it may have contracted again in the July-September third quarter, which would meet the common definition of a recession. However, the median forecast in a Reuters poll on third-quarter GDP suggested the economy skirted a recession by growing 0.1 percent.
09.11.2008 13:24 Russia`s inflation at 0.9% in October, 11.6% in January-October
Russia`s inflation stood at 0.9 percent for October, and 11.6 percent for the year to November, according to the Federal State Statistics Service (Rosstat). For reference, Rosstat cited 2007 figures: 1.6 percent for October, and 9.3 percent for ten months. The base consumer price index which excludes changes in prices for products induced by seasonal or administrative factors ran up to 101.3 percent in October, and 111.5 percent for the year to November. Despite the general price rise, however, gasoline prices sank 1.5-2.5 percent depending on the grade. So far, the Russian authorities have stuck to their official inflation forecast of 11.8% for 2008 although the government and the Central Bank have conceded that consumer price growth is likely to hit 13% this year. Most analysts predict inflation to hit 13-14% in 2008. The Russian authorities are planning to adjust their 2008 inflation forecast in November, taking into account the need to shore up liquidity in the domestic financial market by injecting billions of U.S. dollars into the economy.
30.10.2008 23:01 U.S. GDP dropped to a seasonally adjusted 0.3 percent annual rate in the third quarter
The U.S. economy officially shrunk as the country`s gross domestic product in the third quarter turned negative on higher number of consumers cutting down on spending, according to a report. The latest report by the Commerce Department released Thursday showed that the U.S. gross domestic product dropped to a seasonally adjusted 0.3 percent annual rate in the third quarter, but remained within the estimated decline of 0.5 percent by the market analysts on Wall Street. Nonetheless the decline is the biggest drop in the GDP figure since during July through September of 2001, when the U.S. economy shrunk by 1.4 percent. The report added that it is a preliminary estimate of the third quarter. The economy mainly contracted due to negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software. Imports, which are a subtraction in the calculation of GDP, decreased. The positive contributions that prevented the economy from further declining include federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Some of the analysts said the data reflects that the economy is in recession as credit crisis further deepens with collapsing of larger firms like Lehman Brothers Holdings Inc. and consolidation of Washington Mutual Co. during the quarter. Excluding food and energy, core consumer inflation increased by 2.9 percent in the third quarter, compared to the second quarter rise of 2.2 percent, the report showed. The real consumer spending, which accounts for about 70 percent of the country`s total gross domestic product (GDP), moved down by 3.1 percent in the third quarter on an annual basis, after increasing by 1.2 percent in the second quarter. The consumer spending slipped to the lowest level since its steepest decline of 8.6 percent in the second quarter 1980. Real exports of goods and services increased by 5.9 percent, compared to its rise of 12.3 percent in the second quarter; while imports dropped 1.9 percent in the quarter from 7.3 percent drop in the prior quarter. Equipment and software dropped by 5.5 percent, compared with a decrease of 5.0 percent. Real residential fixed investment slipped by as much as 19.1 percent, compared with a decrease of 13.3 percent. Federal government consumption expenditures and gross investment surged by 13.8 percent in the third quarter, compared with an increase of 6.6 percent in the second quarter. National defense outlays increased 18.1 percent, compared with an increase of 7.3 percent in the previous quarter; while nondefense increased 4.8 percent, compared with an increase of 5.0 percent. The U.S. economy had increased by 2.8 percent pace in the second quarter of this year.
24.10.2008 22:30 The Central Bank said Russia`s GDP will grow 5.7-7.1 percent in 2009
Depending on the oil price, Russia`s GDP will grow 5.7-7.1 percent in 2009, the Russian Central Bank said. According to the bank`s report, foreign trade conditions for Russia are expected to deteriorate in 2009-2011, compared with the previous three-year period. This environment will restrict Russia`s economic growth and curb inflation. The slowing of growth in the production of goods and services, which began in 2008, will continue in 2009, in accordance with forecasts. "The slowing of growth in demand expected in 2009 in countries that are the leading importers of Russian goods, the slowing of growth in consumer prices in countries that are the leading suppliers of goods to Russia, and also the possibility of declines in the prices of raw materials in line with world market trends, will affect the Russian economy by restricting economic growth and curbing inflation," the Central Bank said. According to the International Monetary Fund, Russia`s GDP in 2009 will grow by 5.5 percent. Inflation in Russia in 2009 will remain high, at 12%, the IMF said. The IMF also said inflation in Russia in 2009 would be the highest in Europe except for Ukraine. Meanwhile, the Russian government and the Central Bank have set the task of cutting inflation to 7.0-8.5 percent in 2009, 5.5-7.0 percent in 2010 and 5.0-6.8 percent in 2011.
20.10.2008 20:38 Russia`s GDP growth in September 2008 was only 0.4 percent
The official said GDP growth in Russia from January to September 2008 was 7.7 percent, higher than the 7.6 percent growth for the same period last year. But Russia`s GDP growth in September 2008 was only 0.4 percent compared to 7.0 percent in August 2008. Russia`s economic growth may decelerate in the medium term compared to the forecast, said Deputy Economy Minister Andrei Klepach. He noted, however, that if most problems are solved now, there will be no sharp slowdown. As reported earlier, Russia`s GDP growth is expected to reach 7.8 percent in 2008, 6.7 percent in 2009, and 6.6 percent in 2010, according to the Economy Ministry`s current forecast. Meanwhile, The International Monetary Fund revised Russia`s 2008 GDP growth forecast from 7.1% to 7.0% and raised its inflation projection for the country from 13.8% to 14.0% amid the ongoing global financial crisis. "In Russia, the growth forecast for 2008 reflects a stronger-than-expected performance early in the year, rising terms-of-trade gains, and a longer-than-expected fiscal stimulus package. But growth is set to weaken appreciably, reflecting slowing world demand and tightening financial conditions," the IMF said in its latest World Economic Outlook. According to the IMF, GDP growth in Russia is expected to fall to 5.5% and inflation ease to 12% in 2009.
17.10.2008 21:05 U.S. industrial production fell 2.8% in September 2008, most since 1974
Industrial production in the U.S. fell in September by the most in almost 34 years as hurricanes and an aircraft strike combined with the credit crunch to weaken manufacturing. The 2.8 percent decrease in production at factories, mines and utilities exceeded forecasts and followed a revised 1 percent decrease in August, the Federal Reserve said today. For the third quarter, output fell at an annual rate of 6 percent, the biggest decline since 1991. Last month`s Gulf Coast hurricanes accounted for 2.25 percentage points of the decline in industrial production, and a strike at Boeing Co. accounted for most of the rest of the drop, the Fed said. Frozen credit markets and higher borrowing costs will force consumers and companies to further trim purchases of expensive items such as cars and machinery. Last month`s decline in output was the biggest since December 1974. Industrial production was forecast to fall 0.8 percent after a previously reported 1.1 percent drop, according to the median estimate of 73 economists surveyed by Bloomberg News. Projections ranged from a gain of 0.1 percent to a drop of 2.8 percent. Factory output, which accounts for about four-fifths of industrial production, fell 2.6 percent after a 0.9 percent decrease the prior month. Utility production rose 2.2 percent after dropping 3.1 percent. Mining output, which includes oil drilling, decreased 7.8 percent, after no change in August. Oil production operations and other facilities were shut down because of Hurricane Ike, which made landfall on the Gulf Coast of Texas on Sept. 13, less than two weeks after Hurricane Gustav struck Louisiana. Capacity utilization, which measures the proportion of plants in use, fell to 76.4 percent from 78.7 percent the prior month. Industrial capacity utilization was estimated to fall to 77.9 percent according to the Bloomberg survey median, from an originally reported 78.7 percent in September that was the lowest level in almost four years. Motor vehicle and parts production increased 1.9 percent following an 11.3 percent drop the prior month, the report said. Production of consumer durable goods, including automobiles, furniture and electronics, fell 0.7 percent.
15.10.2008 21:50 Russia`s industrial production grew 5.4 percent in January-September 2008
Russia`s industrial production index stood at 105.4 percent in January-September 2008 compared with the same period of the previous year, the Federal State Statistics Service (Rosstat) said in a statement. In September alone, the index reached 106.3 percent compared to September 2007, whereas in August 2008 it amounted to 101.4 percent against the same month a year earlier. The primary sector saw only a small increase of 0.5 percent in January-September, while manufacturing industries enjoyed a 7.7-percent rise, and the production and distribution of electricity, gas, and water grew 4.3 percent.
08.10.2008 22:16 IMF forecasts the world economy to slow sharply in 2008-2009, led by US
The world economy will slow sharply this year and next, with the United States likely sliding into recession reflecting mounting damage from the most dangerous financial jolt in more than a half-century. The International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the global economy and predicted the United States — the epicenter of the financial meltdown — will continue to lose traction. The IMF now projects that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing to 3.9 percent this year. It is forecast to weaken even more - to just 3 percent - next year, marking the worst showing since 2002. In the past, the IMF has called global growth of 3 percent or less the equivalent to a global recession. In the United States, the economy, which grew by 2 percent last year, is projected to slow to 1.6 percent this year. Growth would screech to a virtual halt in 2009, barely budging at just 0.1 percent. That would mark the worst showing since 1991, when the country was pulling out of a recession. Looking at other countries, Germany`s growth will slow to 1.8 percent this year, down from 2.5 percent last year. France`s growth will weaken to just 0.8 percent, compared with 2.2 percent in 2007. Britain`s economy will see growth taper to 1 percent, down from 3 percent last year. Canada`s growth will tail off to 0.7 percent this year, from 2.7 percent last year. In Japan, growth will cool to just 0.7 percent, from 2.1 percent last year. Global powerhouses China and India will see growth clock in this year at a robust 9.7 percent and 7.9 percent, respectively. Even if those projections prove correct, they would still mark downgrades from their blistering performances last year. Russia`s economy should grow by a brisk 7 percent this year, down from 8.1 percent last year. Inflation around the world remains high, driven up by surging energy and food prices through much of this year.
06.10.2008 20:33 Credit-market deterioration in the second half of September is enough to push the U.S. economy into recession
Credit-market deterioration in the second half of September is enough to push the U.S. economy into recession, forecasters for the National Association for Business Economics say in their latest survey. The 48 economists in the NABE panel say gross domestic product will decline 1.1% this quarter and 0.5% in the first quarter of 2009 if credit conditions don’t improve by year end. The survey was taken last Wednesday and Thursday as a follow-up to a NABE poll of its forecasters in mid-September. In the earlier survey, the panel said GDP would increase 0.1% — essentially flat performance — in the current quarter and a 1.3% increase next year according to the median view of forecasts. The weak credit markets also mean higher unemployment. The jobless rate would hit 7% by mid-2009 under current conditions, compared to the 6.4% estimated in the initial survey, the panelists said. For 2009, the NABE follow-up survey last week said the government’s $700 billion rescue plan “would blunt much of the economic decline that might otherwise develop.” Real GDP growth in 2009 would be about 0.75 percentage point lower next year without the government’s plan, and the unemployment rate at the end of next year would be half a percentage point higher. In addition, stock prices — measured by the S&P 500 — would be 10% lower by the end of this year than they’d be if no plan were in place, the panel said.