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31.05.2017 00:17 If Europe Really Worried About Russia, It Would Get Serious About Defense Spending

NATO leaders got acquainted with President Donald Trump this week. One can only imagine what they thought of the Donald. Their main objective was to reinforce the efforts of his aides to turn him into a traditional American cheerleader for European dependence. For those seeking to revive an alliance created almost seventy years ago, in a vastly different time, Russia has resumed its role as the “necessary” enemy. The organization faded in relevance—indeed, lost its raison d`être—but recently reasserted its role as Europe`s guardian. Lt. Gen. Ben Hodges said the United States was returning troops to the continent as part of the “transition from assurance to deterrence.” Their “mission is to deter Russia,” he added. Since Russia`s occupation of Crimea and intervention in eastern Ukraine there has been much fevered rhetoric about the Russian Threat. A Hitleresque Vladimir Putin was prepared to occupy the rest of Ukraine, swallow the three Baltic States, and sweep into Poland. Some analysts posited threats against Finland and the Nordic nations. Shrill demands arose for allied—and especially American—deployments along NATO`s border with Russia, as well as expanded alliance membership. Yet the Europeans don`t fear a Russian variant of Blitzkrieg. Ignore what they say. Look at what they do. Moscow occupied Crimea in March 2014. That same year NATO Europe reduced its real collective military spending by one percent. In 2015 the same countries increased real outlays by just .5 percent. Last year the hike, heralded as a grand turnaround and harbinger of future increases, was an anemic 3.8 percent.

28.05.2017 22:00 QNB: Global trade growth may recover in 2017

Global trade growth, which has undergone an “extended slump” since the financial crisis, may finally recover this year, QNB has said in an economic commentary. According to QNB, global trade growth has been “deteriorating steadily” since the financial crisis in 2008 and fell to a new low in 2016. However, recent data suggest that the persistent downward may have begun to reverse towards the end of 2016 and during early 2017. “We expect global trade to recover in 2017 as the factors that drove the slowdown have gone into reverse, although some risks remain,” QNB said. Global trade has been declining, even when compared to global GDP growth, it said. Before the financial crisis, in 2003-07, global trade grew at more than twice the rate of global GDP, but this fell to 1.4 times the GDP in 2011-15 and to just 0.9 times in 2016.

26.05.2017 01:06 A new reality in the global economy

Recently, in his first interview as United States president with The Economist magazine, Donald Trump explained and laid down his economic vision for the US and the global economy. This is perhaps his most comprehensive explanation about what he wants to do for the economy, though the United Kingdom-based magazine still deemed it inadequate and incoherent, and considering it more like a business wishlist rather than an economic plan. Be that as it may, Trump`s grand strategy for the economy, or “Trumponomics”, has three crucial objectives: achieve fairer trade deals; reduce taxes and deregulation; and, spur more infrastructure spending. All these, he believes, will create jobs, promote growth, reduce trade deficits and create an investment boom for the US economy. There are, of course, some issues with his proposal, like how he could get Congress to implement his expansive tax cuts and fund massive infrastructure projects. Trumponomics is also seen as self-contradictory and has been based on a misdiagnosis of the root cause of the US`s trade deficit. The magazine argues that the focus on addressing trade deficit without improving savings would jeopardise the US economy with the possible reduction in foreign capital flowing into the US in the long run.

24.05.2017 23:35 Russian Economy Moves to Recovery from Recession

The Russian Federation is showing encouraging signs of overcoming the recession it entered in 2014. The economy is projected to grow 1.3% in 2017, and then 1.4% in both 2018 and 2019, according to the World Bank`s latest Russia Economic Report (no. 37 in the series) launched on May 23 in Moscow. Growing macro-stability, driven by the government`s policy response package of a flexible exchange rate policy, expenditure cuts, and bank recapitalization – along with tapping into the Reserve Fund – has helped facilitate the adjustment of an economy hit by the double shocks of low oil prices and restricted access to international financial markets. The positive terms-of-trade effect from rising oil prices, coupled with more stable macroeconomic conditions, are expected to drive Russia`s economic recovery going forward. “Macro stability and oil prices are the main factors driving this recovery,” said Apurva Sanghi, World Bank Lead Economist for the Russian Federation and the main author of the report. “Successful adherence to the 2017 – 2019 Budget Law will be key for laying the proper groundwork for the planned fiscal rule, which will subsequently reduce the sensitivity of the budget to oil prices and improve economic predictability”.

22.05.2017 22:42 Russia recovery sputters as economy continues slog

As Russia`s economy tries to put the recession behind it, a buildup of imports at a clip last seen in 2011 might mean a longer slog ahead. While top officials including President Vladimir Putin were counting on a stronger rouble to make foreign goods less expensive and ease the way for companies to bring in equipment and technologies, the surge of shipments from abroad can be deceiving. Instead of ringing in a boom in investment, businesses are using gains in the exchange rate to stock up inventories while pushing back plans for higher capital expenditure, according to Alfa Bank. Encouraging investment by championing the benefits of a stronger currency is among the few options Russia has to push up growth and make up ground lost during its longest recession this century. But the authorities have little to show for their efforts so far, with gross domestic product adding only 0.5% from a year earlier last quarter after an increase of 0.3% in the previous three months. Growth in imports, which averaged 27% in January-March, “isn`t sustainable,” according to the investment-banking arm of Russia`s biggest lender. “The increase in imports at such a pace is a temporary phenomenon linked to rouble strengthening,” said Anton Stroutchenevski, economist at Sberbank CIB. “Import dynamics will slow.”

19.05.2017 14:36 Japan scores longest GDP growth run in more than a decad

Japan has recorded its longest run of sustained growth in more than a decade as stimulative policy and a healthier global economy lead to a period of robust progress. Growth for the first quarter of 2017 came in at an annualized 2.2 per cent, according to the Cabinet Office, marking five quarters of continuous expansion in gross domestic product. The figure beat the consensus analyst forecast of 1.7 per cent and is far above Japan`s long-run growth potential of roughly 0.7 per cent. That suggests the economy is using up spare capacity and unemployment will keep on falling. Sustained expansion signals the Japanese economy has regained its momentum following the consumption tax rise of 2014 and emerging market weakness in 2015 that led to a prolonged slowdown.

16.05.2017 14:22 World Bank head says initiative good for world economy

The China-led Belt and Road Initiative serves as a constructive platform to help achieve common prosperity for regional economies and contributes to global development, World Bank President Jim Yong Kim said on Sunday. China`s growing influence can be applied through the initiative to help other countries work through their differences and foster the development of free trade and investment, Kim told China Daily on the sidelines of the ongoing Belt and Road Forum for International Cooperation in Beijing. The initiative consists of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Global and regional trade and investment still face many hurdles - "sometimes even within a single country", Kim said. Trade between states or provinces and another state or province "can be very complicated". "What is needed in terms of tackling these barriers is that you need to have convening power," he said. "You need to bring all the different parties together, and you need to get them to sit in a room and work out these kinds of differences.

14.05.2017 18:37 Annualized Inflation in Russia Expected to Decrease to 4% in May

Minister Maxim Oreshkin said that annualized inflation rate in Russia is expected to fall to 4 percent in May, two months sooner than the target set by the Russian Economic Development Ministry. The annualized inflation rate in Russia is expected to fall to 4 percent in May, two months sooner than the target set by the Russian Economic Development Ministry, Minister Maxim Oreshkin said Friday. "We expect that the rate of 4 percent will be already reached in May. The estimations for the year end are changing. In accordance with the basic scenario and under the condition of the weakening ruble, the inflation rate is expected to be 3.8 percent. If the ruble stands stable and the currency rate amounts to 56-57 rubles [per dollar], the inflation will amount to about 3 percent," Oreshkin told the Rossiya 24 broadcaster in an interview. According to Oreshkin, the situation is currently developing in accordance with the ministry`s forecast. "But it is very important… that as soon as inflation trajectory starts following such an optimistic scenario, we will immediately see the reaction of the Central Bank," the minister added.

12.05.2017 11:38 Global Economy: Is growth optimism justified?

Daniel Ben-Ami finds that while there are signs that the global economy might be bouncing back, doubts are being raised by the weakness of the recovery. A mood of cautious optimism seems to have pervaded the financial markets recently. After a painful decade, which included a global financial crisis and a euro-zone crisis, many economic indicators appear to be pointing upwards. Fears of descent into a global slump are being superseded by hopes of a cyclical upturn in the world economy. Sometimes this shift is referred to as `global reflation`. The idea is that the economy is shifting from a deflationary period, when growth is running consistently below its trend rate, to an expansionary one. From this perspective, a rise in inflation is welcome, as it indicates a pick-up in consumption and growth. As long as there are no signs of runaway prices, the shift to moderate inflation would be read by many as a return of vibrant `animal spirits` to the economy.

10.05.2017 17:15 China credit squeeze dents global growth

The global economy has continued to expand at well above its trend growth rate since the beginning of 2017, but there have been some early signs of a slackening in recent weeks. According to the latest monthly results from the Fulcrum nowcasts, global growth is now running at 4.1 per cent (at PPP exchange rates), which is about half a percentage point lower than a month ago. This “slowdown”, which has been driven by the US and China, is well within the normal range of monthly fluctuations in the global nowcast, and it may be nothing more than a temporary blip. There are some legitimate reasons for concern about the slowdown in China, which seems to be connected to tighter credit polices. Fortunately, however, the Chinese economy seems in better shape to absorb this tightening than it was in 2013-15. Since the American Presidential election in November 2016, much of the attention of investors has been focused on the US economy, which is usually seen as the litmus test for the “global reflation theme”. The nowcasts have identified a strong surge in US growth, starting in September 2016 and peaking at over 4 per cent in March 2017.

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