The Lastest Macroeconomic News

31.05.2016 17:46 Russia`s economic dilemma: Are higher oil prices a blessing or a curse?

With world oil prices rising, the International Monetary Fund has marginally improved its forecast of the restoration of Russia`s economy. According to the IMF, in 2016 the country`s GDP will fall by 1.5 percent instead of the 1.8 percent earlier predicted. In turn, in 2017 Russia`s economy will grow by 1 percent instead of 0.8 percent. This is surely good news. However, it also raises concerns among a whole series of Russian politicians and economists. The growth of oil prices in Russia strengthens the national currency (against which the Central Bank is consistently taking measures) and drastically cheapens imports. Consequently, this creates a threat for exporters and makes production in Russia disadvantageous. Moreover, the growth in oil prices threatens to stop the country from carrying out economic reforms, without which, in the view of many experts, the Russian economy will not be able to develop effectively. Earlier, Central Bank Chairwoman Elvira Nabiullina remarked that even with a price of $100 a barrel Russia`s GDP would be unable to grow by more than 1.5-2 percent if structural reforms are not implemented.

30.05.2016 10:57 The Russian Economic Revolution That Never Was

Russia`s economic strategy is in disarray. The government has already cut its federal budget for 2016 twice, and the Kremlin has still not made a final decision on this year`s spending. After muddling through two years of economic hardship, government members, silovarchs and technocrats are squabbling over how to escape a prolonged crisis. On Wednesday, Russian President Vladimir Putin resurrected his Presidium of the Economic Council to come up with a plan for the next three years. The presidium has been dormant for two years. Originally composed of dozens of economists, statesmen and entrepreneurs, the group proved too large and diverse to agree on a future economic and financial strategy for Russia. In its latest iteration, the presidium has shrunk to just six members representing Russia`s three primary economic camps.

28.05.2016 11:15 Is G7 better without Russia?

Leaders of the world`s seven most industrialised nations - the US, the UK, France, Japan, Italy, Canada and Germany - meet on 26-27 May at the G7 summit in Ise-Shima. The slowdown in the global economy, terrorism, problems in the South China Sea, but also health issues and climate change, are on the agenda. "The most delicate issues are the security issues, including the South China Sea, that are broadly: what do we do about China as a whole," says John Kirton director of the G7 Research Group at the University of Toronto, speaking from the conference centre in Ise-Shima. "Other issues include the Asian Infrastructure Investment Bank, human rights, the Chinese economy, its fragile financial system, its initiatives on climate change, problems of cyberspace and North Korea. The big question on China is if the G7 leaders stand united in their approach to China in its role as a host of the G20 summit coming up in Hangzhou China on 4-5 September."

27.05.2016 19:59 Russian output and demand: Waiting for green shoots

Russia`s economy continues to contract, while signs of green shoots are in the air. Russia`s Q1 16 preliminary GDP data shows the economy contracted 1.2% y/y, while consensus expected a 2.0% y/y slump and we expected a 1.5% y/y contraction. Seasonally adjusted monthly data show the economy shrank 0.1% in March, while hovering at zero for 2M 16. The economy`s adjustment to `the new normal` of a lower oil price and western sanctions goes on, as a freely floating RUB and the import substitution programme are helping local industries and private consumers to switch to domestic goods and services on highly increased price sensitivity.

26.05.2016 14:02 Russia Taps Global Credit Markets

Russia on Tuesday tapped international debt markets for the first time since the West applied sanctions two years ago in a move officials touted as a vote of confidence in the country`s financial health. But Moscow raised just over half of the amount expected as a number of global portfolio managers didn`t participate in the bond sale, citing concerns about compliance and issues over the settlement of the bonds. Russia`s finance ministry said it sold $1.75 billion of so-called Eurobonds amid demand of $7 billion. The Russian government`s borrowing plan envisages raising $3 billion in global markets this year to help cover a budget shortfall caused by weak prices for crude oil, Russia`s main export and a large source of state revenue. The bonds were sold to yield 4.75% after initial indications of 4.65% to 4.9%. More than 70% of the bond was purchased by foreign investors, Finance Minister Anton Siluanov said. This is the group we focused on, Mr. Siluanov said. We are satisfied with the placement. Large global banks, unwilling to irk U.S. and European authorities that have sanctioned Russia over its annexation of Crimea and intervention in Ukraine, declined to participate as underwriters of the offering. VTB Capital, the investment arm of Russia`s No. 2 state-owned lender VTB Group, which came under sanctions, was the sole organizer of the bond.

25.05.2016 12:23 Russia`s economy will return to growth by end of 2016

Russia`s economy will return to growth by the end of 2016, Economic Development Minister Alexey Ulyukayev said at a meeting with representatives of business community of Slovakia. "We expect that in the end of the second quarter we will return to growth and in general we expect that by the end of the year the dynamics of GDP will be about zero," he said. Earlier TASS reported referring to the documents for the meeting of the Economic Council under the Russian President, the Economic Development Ministry states stagnation of the Russian economy but believe that the decline is largely over, and the economic cycle is close to the lowest point. The ministry marks signs of recovery in the Russian economy, and expects that it will continue in the medium term. According to the Federal Statistics Service, in the first quarter Russian GDP decline by 1.2%. The Economic Development Ministry predicts GDP decline of 0.2% by the end of the year. Ulyukayev said Russia`s GDP fell 0.7% in April 2016.

23.05.2016 14:40 G7 warns over global economy as currency row flares

G7 finance ministers on Saturday (May 21) voiced concern about the sputtering global economy as they looked for a plan to stoke growth, while a currency policy clash overshadowed their meetings. The club of rich nations also pledged to tackle tax avoidance in the wake of the Panama Papers investigation and beef up efforts to disrupt the murky world of terrorism financing. Two days of talks at a hot spring resort in northern Japan focused on how to stoke global growth which they said was under threat from myriad challenges, including terrorism, refugee flows and the threat of Britain`s exit from the European Union. The ministers were unanimous in opposing the prospect of a "Brexit", saying it would inflict a "shock" on the global economy that would only worsen the outlook at a time of geopolitical instability.

19.05.2016 11:28 Kazakhstan`s Doing Well, now about those Public Finances

As a highly globally integrated, resource-rich, upper-middle income country, Kazakhstan has been facing significant challenges in the current global environment. Kazakhstan`s major challenges include managing its public finances to preserve fiscal stability and generating broad-based economic growth. According to the World Trade Organization, Kazakhstan`s total trade to gross domestic product (GDP) ratio was 69% in 2014, with per capita trade of $8,720. It exhibited a relatively large surplus of $37 billion on merchandise trade, with nearly nine-tenths of the exports under the fuels and mining category, of which about three-fourths were destined for the European Union. In contrast, little over four-fifths of its imports were in the manufacturers category, with the Russian Federation accounting for one-third, and the European Union accounting for around one-fifth of the total imports. In 2014, Kazakhstan had a service trade deficit of $6.3 billion. This suggests that while Kazakhstan is highly integrated globally, its trade profile lacks diversification, and it is vulnerable to slowdowns in oil and metal cycles, as is currently being experienced globally.

17.05.2016 21:06 UN: Weak world economic growth lingers, with only modest improvement seen

With little prospects for a turnaround in 2016, growth in the world economy remains weak, posing a challenge to the implementation of development targets, a new United Nations report has found. According to the UN World Economic Situation and Prospects as of mid-2016 report, launched today at UN Headquarters in New York by the UN Department of Economic and Social Affairs, world gross product will grow by just 2.4 per cent in 2016, the same pace as in 2015, marking a downward revision of 0.5 percentage points from UN forecasts released in December 2015. The report underscores the need for a more balanced policy mix to rejuvenate global growth and create an enabling environment to achieve the 2030 Agenda for Sustainable Development, Lenni Montiel, Assistant Secretary-General for Economic Development in a said. Specifically, the report found that persistent weakness in aggregate demand in developed economies remains a drag on global growth, while low commodity prices, mounting fiscal and current account imbalances and policy tightening have further dampened prospects for many commodity-exporting economies in Africa, the Commonwealth of Independent States (CIS) and Latin America and the Caribbean. This has been compounded by severe weather-related shocks, political challenges and large capital outflows in many developing regions.

17.05.2016 11:36 Kazakhstan attracting $1 billion to improve competitiveness of economy

Kazakhstan intends to attract a loan of $1 billion from the International Bank for Reconstruction and Development (IBRD is a part of the World Bank Group). The relevant agreement that was signed Feb. 17 with the IBRD has been ratified by Majlis (lower house of the Kazakh parliament) May 11, Majlis`s press service said. The loan will be used to finance the development policy in macroeconomic management and to increase the competitiveness of Kazakhstan`s economy. The loan will allow to support main priorities of the country`s social and economic development and the implementation of strategic measures of the Kazakh government to stimulate the economy and promote economic growth.

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