The Lastest Macroeconomic News
29.09.2015 12:34 China`s slowdown could actually be good news for the world economy
At the risk of appearing perverse, let`s start with a counter-intuitive proposition. The slowdown in China, far from weakening the global recovery, might actually help it become more durable. This is not, of course, what the markets think. They recovered a bit, but are still way off their summer peaks. The uncertainties there are echoed by the central banks. The principal reason why the Fed held off increasing US rates last week was the slowdown in China. Andy Haldane, chief economist at the Bank of England, suggested that an emerging-market crisis might become the third leg of the financial disruption that began in 2008-09. Mario Draghi, the president of European Central Bank, acknowledged these concerns, although he concluded: "More time is needed to determine in particular whether the loss of growth momentum in emerging markets is of a temporary or permanent nature."
27.09.2015 11:21 For Russia, Oil Collapse Has Soviet Echoes
For most countries, the economic slowdown in China and the accompanying slump in commodity prices represent something between nuisance and pothole. For Russia, they are a catastrophe. Russia`s currency and economy, already squeezed by Western sanctions, have been sent into virtual free fall by slumping oil prices. The International Monetary Fund predicted in July that Russia`s economy would shrink 3.4% this year, the most of any major emerging market. That now looks optimistic. Anders Aslund, a Russia expert at the Atlantic Council in Washington, thinks 6% is more likely. Coincidentally, that`s close to what the Russian central bank predicted would happen if oil fell to $40 a barrel, roughly its current level. As low commodity prices have impacted markets around the world, Russia may have been hurt the most. WSJ chief economics columnist Greg Ip explains why.
24.09.2015 12:34 Global economy`s outlook becomes bleaker
The outlook for the global economy became bleaker on Wednesday as signs of a deeper downturn in China emerged, despite massive policy stimulus, coupled with weak growth at best in Europe. China`s vast factory sector shrank at its fastest rate in 6-1/2-years in September, a private survey showed, sending investors worried about sagging global growth scurrying out of risky assets. Reacting to the data, Asian stocks posted their biggest single-day fall in a month on Wednesday. Similar surveys, due later on Wednesday, are likely to show the U.S. economy lost some steam in September even with the Federal Reserve holding fire on interest rates. “There is substantial concern at present that global demand weakness is dampening the economy in the industrial countries,” said Jorg Kramer, chief economist at Commerzbank.
22.09.2015 12:46 China`s economy is in trouble. How bad is it?
There is almost no way that China`s economy is growing as well as the government says it is. For years, experts have questioned whether China cooks its books. "The question is not whether they`re right, it`s how wrong are they," says Derek Scissors, an Asia expert at the American Enterprise Institute. But you don`t need a PhD in statistics to figure it out this time. Just take a look at what China`s government has been doing lately: making a surprise devaluation of the yuan in an effort to boost exports, propping up its markets by actually buying stocks, spending big and cutting interest rates in an effort to stimulate its economy. China wouldn`t be taking these actions if the country really was chugging along at the 7% growth rate that the latest government data claims. "China could be in the world`s greatest depression and they would still report 7%," says Gordon Chang, a China expert and author of " The Coming Collapse of China." But just how bad is it in China? Stock markets around the world are tanking because investors are afraid that the world`s second-largest economy will drag other countries down with it. China is a major buyer of commodities like oil and copper. When China doesn`t purchase as much, countries like Australia, Canada and Brazil that provide those commodities to China really suffer.
20.09.2015 10:36 Mexico`s Treasury lowers GDP growth forecast, to 2-2.8 pct
The Mexican Treasury Department lowered its economic growth forecast for 2015 to between 2 percent and 2.8 percent. The new figure was down from a previous projection of 2.2 percent to 3.2 percent growth. Treasury Deputy Secretary Fernando Aportela said the economy was limited in the second quarter by disappointing industrial activity in the United States, which accounts for 80 percent of Mexico`s international commerce. Aportela added that Mexico`s oil production, a main economic driver for the country, has dropped by 165,000 barrels a day. However, he said Mexico has performed solidly in other indicators such as employment and inflation.
17.09.2015 14:09 OECD Lowers Global Economic Forecast
The outlook for the global economy has weakened slightly and become less certain in recent months as ripples from China outweigh an improvement in the U.S., the Organization for Economic Cooperation and Development said Wednesday. In the latest update to its economic forecasts, the Paris-based research body zeroed in on the slowdown in China as the main risk facing the global economy and warned that authorities there face deep challenges. While the OECD said the strength of the U.S. economy justifies the Federal Reserve beginning to raise interest rates at a gradual pace, that robustness isn`t enough to brighten the overall outlook for the rest of the world. The risk from China also comes as the economic recovery in the eurozone is moving slower than might be hoped given the tailwinds from lower oil prices, low interest rates and a weaker euro that should boost exporters, the OECD added. "Global growth will remain subpar in 2015. Some strengthening in growth is expected in 2016, but doubts about future potential growth continue to build," the OECD said. The OECD cut its 2015 global growth forecast to 3% from 3.1% in June and its 2016 forecast to 3.6% from 3.8%. It expects Chinese growth to slow to 6.7% this year and 6.5% next year after 7.4% in 2014.
15.09.2015 10:06 Why Russia is making a risky military move in Syria
Over the last few months a series of diplomatic meetings from Moscow to Washington raised hopes for a serious new push toward a political solution to the vicious war in Syria that has killed more than 250,000 people and forced thousands more to flee to Europe. That optimistic idea has been put in doubt by Russia`s recent moves to significantly bolster military support for Syria`s ruthless dictator, Bashar Assad, whose hold on his country is weakening. Russia has long been a major enabler of Assad, protecting him from criticism and sanctions at the United Nations Security Council and providing weapons for his army. But the latest assistance may be expanding Russian involvement in the conflict to a new and more dangerous level. Russia has sent a military advance team to Syria and transported prefabricated housing units for hundreds of military personnel to an airfield near Latakia, the Assad family`s ancestral home, The Times` Michael Gordon and Eric Schmitt have reported. Russia also sent a portable air-traffic station and filed requests to make military flights over neighboring countries through September. Russia is obviously concerned about the fate of Assad and his regime, which is struggling to sustain an army after four years of war and is suffering such serious battlefield defeats that the state may not survive. The relationship with Syria dates to Soviet times and is one of Russia`s last levers of influence in the Middle East. Russia operates a small naval base at Tartus on the Mediterranean and is keen to preserve it. Russia`s president, Vladimir Putin, may also be using the buildup to strengthen Russia`s hand in any political outcome in Syria and to constrain US military options there. The constructive way to have an impact is for Putin to drop his opposition to Washington`s and its allies` insistence that Assad be replaced as part of a negotiated political settlement that includes a transition to a new government.
13.09.2015 11:46 23.7% of world GDP generated by the EU
The EU hosts just over seven per cent of the world`s population but generates 23.7 per cent of its GDP, according to a Eurostat publication. The 2015 edition of The EU in the World compares the EU with the 15 non-EU G20 countries. Altogether the members of the G20 covered over 61 per cent of the world`s land area, were home to 64 per cent of the world population and generated 85 per cent of global GDP in 2013. With 506 million inhabitants in 2013, the EU accounted for just over seven of the world`s population of 7.1 billion inhabitants. Only China (1.3 billion inhabitants, or 19.1 per cent) and India (1.25 billion, or 17.6 per cent) were more populous. While accounting for 7.1 per cent of the world population, the EU generated in 2013 almost a quarter of the world GDP. The US (22.2 per cent), China (12.1 per cent) and Japan (6.5 per cent) had also a significant weight in world GDP. In 2014 the US and China were also the two main trading partners of the EU, accounting respectively for 15.3 per cent and 13.8 per cent of total extra-EU trade in goods and for 28.5 per cent and 4.1 per cent of total extra-EU trade in services. As regards public finances, the highest ratio of general government debt to GDP in 2013 among G20 members was registered by Japan (243.2 per cent), well ahead of the US (104.2 per cent), Canada (88.8 per cent) and the EU (85.4 per cent).
11.09.2015 18:28 Russia`s Financial System: How Vulnerable?
Is the Russian economy going to collapse? Do sanctions matter? These are the two questions most often asked today about the Russian economy said Sergey Aleksashenko, the former first deputy chairman of Russia`s Central Bank and a former deputy finance minister. At the Center for the National Interest on Thursday, Aleksashenko explained what the fall in oil prices, the decline of the ruble, the rise in inflation and the impact of U.S. and Western sanctions have wrought in Russia. A year ago, oil was trading at near $100 a barrel; today it is less than half that. The IMF`s most recent data project the Russian economy will contract by 3.4 percent this year (it was growing by the same amount as recently as 2012). Russia is in recession, its longest since 1997. But collapse is not in the cards, said Aleksashenko, who has also served as the chairman and CEO of Merrill Lynch Russia. His lapidary verdict: the Russian economy is "more stable than many believe." But Aleksashenko in no way tried to sugarcoat developments in Russia. Quite the contrary. He explained that his overall forecast for the Russian economy is "rather gloomy."
07.09.2015 10:16 These 5 Facts Explain Russia`s Economic Decline
Corruption, cheap oil and unproductive workers all hold Russia back—though Russians don`t seem to care. For the first time since 2009—low point of the global economic slowdown—Russia is in recession. Its economy will contract 3 percent this year, though Moscow`s $360 billion in cash reserves will cushion the immediate blow. Still, as President Vladimir Putin continues to try to assert Russian power on the international stage, it has become clear that he is now ruling a “submerging market.” Unless something changes, Russia is in for a slow and steady economic decline. These five sets of stats explain why. 1. Lack of Diversification. 2. At the Mercy of Oil Markets. 3. At the Mercy of Sanctions. 4. Russia`s Other Problems. 5. No Incentive to Change.