The Lastest Macroeconomic News
07.12.2015 20:33 OPEC Unshackled From Quota Could Add Millions of Barrels
OPEC`s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. “Everyone does whatever they want” now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It`s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya. “It means more OPEC oil next year,” Jamie Webster, a Washington-based oil analyst for IHS Inc., said of the organization`s Dec. 4 decision. “OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production.” Oil slumped 2.7 percent in New York on Friday after OPEC ended its meeting without specifying a new production quota, saying instead that it would keep output near current levels of 31.5 million barrels a day. Crude prices extended losses on Monday to a three-month low of $38.49 a barrel.
06.12.2015 19:04 The U.S. Economy Looks Great, Unless You`re a Manufacturer
On Friday the Labor Department announced that the U.S. economy had added more than 211,000 jobs in November, and that the unemployment rate held steady at 5% - below the post-war average of 5.8%. In recent months, job growth has been strong enough that the Federal Reserve appears convinced that it needs to raise interest rates to keep rising wages from sparking inflation. And the performance of the U.S. economy has been so strong relative to the rest of the world that it has sent the value of the dollar soaring more than 16% on a trade-weighted basis since the middle of last year. But not everyone is on the bandwagon just yet. At the National Competitiveness Forum this week in Washington, D.C., CEOs of some of the largest U.S. companies met to discuss what can be done to increase the competitiveness of American firms, and several expressed a different view of the economy from what we saw reflected in Friday`s jobs report and the subsequent stock market reaction.
04.12.2015 14:22 India`s Economy Grows 7.4%, Outperforming China
India`s economy grew by 7.4% year-on-year in the last quarter, according to official figures released Monday, outperforming China and giving Prime Minister Narendra Modi a boost following a recent election drubbing. Growth in the three months to the end of September quickened to 7.4% from 7.0% in the previous quarter, according to statistics ministry data, slightly ahead of analysts` expectations. India has now recorded three straight quarters of growth above 7%, performing better than its giant neighbor China on each occasion and leading the way for emerging markets with Russia and Brazil flagging. “China was the leader of economic growth across the globe for two decades or so until 2014,” said Sujan Hajra, chief economist at Anand Rathi Securities. “But India will now be the pace-setter for the next two to three years at least.” The figures for the second quarter of the financial year bettered China`s 6.9% increase in gross domestic product recorded for the same three months and reported by Beijing last month. They were also higher than the median forecast of 7.3% in a survey of economists by Bloomberg News.
03.12.2015 12:54 Credit Suisse: Ruble Overvalued As Crude Oil Prices Drop, Threatening Kremlin Budget And Recession
Russia needs to restock its national reserves to devalue its ruble currency, an analyst from Credit Suisse said Tuesday, as reported by Bloomberg. The value of the ruble has become inflated as the price of crude oil, one of Russia`s main exports, has dropped, and the country needs to devalue the currency to prevent an economic recession from deepening and deficits from widening, the analyst said. “The revenues from oil exports need to increase, and I don`t see any other solution but through devaluing the ruble,” said Valery Pushnya, Moscow-based head of emerging markets in Europe, the Middle East and Africa at Credit Suisse Group. The imbalance has reduced revenue for the government`s budget and could threaten a deficit, according to Pushnya. Amid Russia`s economie troubles, $1 has become the equivalent of 66.2 Russian rubles, compared with an average of 26.38 in recent decades and an all-time high of 72 in December 2014, Trading Economics reported. Other analysts have noted that the devalued ruble has helped exports, albeit with a lower value. "Russian production continued to accelerate as oil producers remained profitable even in the lower-oil-price environment, helped by the effect of a weak ruble on costs and lower taxes, which decline in a lower-oil-price environment," Bank of America Merrill Lynch stated in recent research, Reuters reported.
02.12.2015 12:37 The $30 Oil Cliff Threatening Russia`s Economy
For Russia, $30 is the number to watch. Crude prices at that level will push the economy to depths that would threaten the nation`s financial system, according to 15 of 27 respondents in a Bloomberg survey. Lower prices for the fuel are next year`s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts. “If oil prices fall lower and stay at that low level for longer, risks of fiscal and financial destabilization increase significantly,” Sergey Narkevich, an analyst at PAO Promsvyazbank in Moscow, said by e-mail. Russia, which has adjusted to the worst commodities slump in a generation with spending cutbacks and a weaker ruble, may be hard-pressed for policy answers if oil slumps further after losing more than a third of its value in the past year. While Brent, the European benchmark, is trading around $45 a barrel, a warmer-than-average winter could weaken heating-fuel demand enough to trigger a decline in the price of crude to $20, analysts at Goldman Sachs Group Inc. said in a note Nov. 18.
30.11.2015 13:49 Four reasons Russia and Turkey can`t afford a trade war
A war of words has erupted after Turkey shot down a Russian warplane on November 23. Russian President Vladimir Putin called the downing of the jet a "stab in the back by the terrorists` accomplices." His Turkish counterpart Recep Tayyip Erdogan accused Moscow of deceit, and described Putin`s comments as a "huge mistake" in an interview with CNN. Russian officials are drawing up possible retaliatory economic sanctions against Turkey. But a trade war would cost both sides dearly. Here`s why: 1. Russia has few friends. 2. A strategic energy link. 3. Tourist traffic. 4. Both need all the help they can get.
28.11.2015 14:44 This is how Russia could hurt Turkey`s economy
Russia and Turkey have a raft of strategic and commercial trade deals in place which could be at risk as the diplomatic row over Turkey`s downing of a Russian warplane continues. Geopolitical tensions between Russia and NATO member Turkey have risen this week after a Russian SU-24 warplane was shot down by a Turkish F-16 fighter jet on Tuesday. Turkey said the jet was in Turkish airspace and ignored warnings to leave, Russia denies this. Since the incident a war of words has broken out between the two countries over who was at fault and Russia has threatened to retaliate on an economic level. On Wednesday, Russian Prime Minister Dmitry Medvedev said Turkey`s actions could result in the scrapping of joint projects and that Turkish companies could lose Russian market share. On Thursday, Medvedev appeared to harden his stance against Turkey, ordering the government to draw up measures which could include freezing some joint investment projects with Turkey, Reuters reported. These could also include restrictions on food imports, he said. Erdogan responded by saying such talk was "emotional" and "unfitting for politicians," Reuters reported. He added that he was saddened by such statements from Russia. This could be significant for both countries, Turkey is Russia`s second most important trading partner after Germany and, if Russia goes ahead and cuts economic ties, both countries will feel the effects, analysts warn. CNBC looks at the economic ties that bind Russia and Turkey and the potential impact of the relationship going sour.
26.11.2015 12:25 US Economy: 2015 will be another year of only modest growth
The U.S. economy grew slightly faster in the summer than previously reported, mainly because of a less severe slowdown in businesses stockpiling. The overall economy, as measured by the gross domestic product, grew at an annual rate of 2.1 percent in the July-September period, the Commerce Department reported Tuesday. That is better than its previous estimate of 1.5 percent growth. Even with the revision, economic growth slowed sharply from a 3.9 percent gain in the second quarter. The economy then was rebounding from a harsh winter that had sapped first quarter growth to a barely discernible 0.6 percent pace. "Growth is now averaging 2.2 percent for the first three quarters of the year and fourth-quarter estimates are in the range of 2 percent to 2.5 percent. Thus, 2015 will end up being more of the same in terms of the pace of the expansion which is now in its 7th year," Peter Boockvar, chief market analyst at the Lindsey Group.
25.11.2015 22:15 Russia`s economy stabilizing
There are tentative signs of economic stabilization in Russia, the International Monetary Fund said in a report released late on Monday. "The Russian economy is expected to contract by 3.8 percent in 2015, followed by a milder contraction of 0.6 percent in 2016, due to the headwinds from lower oil prices," the report said. Russian trade is improving despite low oil prices, according to the report. "The current account adjustment is progressing rapidly, supporting the ongoing external deleveraging process," the report said. The IMF predicts that inflation will decline to 12.7 percent at the end of 2015, and, in the absence of shocks to international oil prices, to continue to fall further during 2016. Currently inflation in Russia is at an annual 15.7 percent. “Monetary policy has been appropriately on hold, but normalization can resume once underlying inflation and inflation expectations are firmly on a declining path. The pace of easing should be balanced against external risks and the need to build credibility under the newly introduced inflation targeting regime," the report said.
25.11.2015 11:48 Ad Industry Accounted for 19 Percent of U.S. GDP in 2014
For anyone down on advertising, the Association of National Advertisers and The Advertising Coalition commissioned a study that highlights some of the industry`s big economic benefits. Namely, advertising contributed $3.4 trillion to the U.S. GDP last year, a figure that accounts for 19 percent of the country`s entire economic output. The study, done in partnership with IHS Economics & Country Risk, was also designed to analyze the impact a recent tax proposal would have on the U.S. economy. The proposal would allow businesses to deduct 50 percent of their annual advertising spending. "This new study underscores the essential nature of advertising in promoting both business and economic growth in this country. The very fact that this industry contributes nearly 20 percent to the nation`s GDP sends a powerful reminder to policymakers that advertising is an essential stimulus to the U.S. economy that should be promoted and not subjected to tax," Bob Liodice, president and CEO of ANA, said in a press release.