The Lastest Macroeconomic News

24.04.2015 22:08 China`s economic growth hits 6-year low

A slump in the property market pushed Chinese economic growth down to 7 percent in the first three months of this year, its lowest quarterly pace since 2009. Premier Li Keqiang warned that the numbers were “not pretty” and that the country should brace for tougher times ahead. The housing slowdown has also hit heavy industries such as steel and cement, while falling global commodity prices have squeezed industrial profits. The government expects to be able to hold the line at 7 percent for 2015. That would be the lowest annual rate of growth in 25 years but still considerably faster than most major nations, and enough for the Communist Party to maintain its claim to sound economic leadership. Economists expect the government to cut interest rates further and bolster infrastructure spending in coming months to prevent a sharper slowdown, but officials acknowledge the risks to the economy have increased. “Economic data in the first quarter are not pretty,” Li told a seminar Tuesday, a day before the numbers were released, according to the official China Daily newspaper. “Traditional economic driving forces such as consumption and investment are diminishing, while new forces are not compensating.” Li said the nation should be prepared for greater downward pressure on the economy and increasing difficulties, although the premier expressed confidence about the economy`s long-term prospects.

23.04.2015 16:22 Russia Sees GDP Growth Restart in the Fourth Quarter of 2015

Russia`s economy may return to growth in the fourth quarter after its first recession in six years, government officials said on Thursday April 23. Gross domestic product may expand 2.3 percent in 2016 after a contraction estimated at 2.8 percent this year, Economy Minister Alexei Ulyukayev said at a cabinet meeting in Moscow. The ministry, which previously forecast this year`s decline at 3 percent, is seeing signs of financial and macroeconomic stabilization after GDP slumped 2.2 percent in the first quarter from a year earlier, Ulyukayev said. The economy of the world`s biggest energy exporter is weathering the effects of a currency crisis that followed last year`s crash in oil prices and sanctions imposed over Ukraine. After the steepest four-day slump since January, the ruble is resuming an advance that made it the best-performer globally this year. “The dynamics of the real sector are turning out to be not as catastrophic as it seemed to most experts and, truth be told, to us as well at the end of last year and the beginning of this one,” Ulyukayev said.

22.04.2015 13:09 Russia`s economy contracted about 2 percent in the first quarter

Russia`s economy contracted about 2 percent in the first quarter on an annual basis, Prime Minister Dmitry Medvedev said blaming the slump on the unprecedented challenges from a plunge in oil prices and sanctions imposed over Ukraine. Russia`s industrial production dropped by 0.4 percent in the first quarter. The downturn was “most acute” at end-2014 and the start of this year and the situation is now “stabilizing,” Medvedev told lawmakers at the lower house of parliament in Moscow on April 21. The decline in gross domestic product is the first since a contraction in 2009. “There should be no illusions,” Medvedev said. “Today we face not only short-term crisis effects: if external pressure increases while oil prices remain at an extremely low level for a long time, we`ll have to develop in a different economic reality, which will test our strength in full.” The economy of the world`s largest energy exporter is entering a recession after an almost 50 per cent crash in oil prices and the rouble`s worst crisis since 1998. Sanctions enacted by the US and the European Union over the conflict in Ukraine curbed access to international financial markets and stoked capital outflows. Even with a tenuous ceasefire in Ukraine and stabilizing oil prices, the central bank predicts that the economy will shrink as much as 4 per cent this year.

21.04.2015 16:10 Why the Ruble Rally Has Run Its Course

A few months ago, it seemed like Russia was doomed. The West had just imposed sanctions, crude prices crashed, and the Ukrainian situation deteriorated. Because of all the concerns, capital left Russia en masse and the Russian ruble cratered, going from 35 rubles to the dollar to 80 rubles to the dollar. Today, the ruble is one of the best performing currencies in the world, having rallied 15% against the dollar year to-date. Because of the rally, Russia`s currency now trades at a respectable 53 rubles to the dollar. One big reason for the rally is that the Russian economy is doing better than expected. Despite the plunge in crude prices from August to December, the economy grew a surprise 0.4% in fourth-quarter 2014. Because crude prices have since stabilized, Russia`s GDP won`t shrink as much as expected in 2015, while many economists expect the Russian economy will expand in 2016. Another reason for the rally is that capital is flowing back into Russia. Because the ruble has done so well, bond managers feel that they have to buy the Russian bonds in their chase for performance. The ruble`s rise may soon end, however.

20.04.2015 17:16 G-20 Warns of Threats to Global Economic Recovery

The world`s top finance leaders warned that currency volatility, low inflation and high debt levels threaten to undermine an already uneven global economic recovery. In an official statement after two days of meetings, finance ministers and central bankers from the Group of 20 largest economies backed more easy-money policies in wealthy nations as critical accelerants for growth. “In many advanced economies, accommodative monetary policies are needed to anchor inflation expectations and support recovery,” the G-20 said. The G-20 affirmed its support for central-bank stimulus in Europe, Japan and the U.S. Officials are increasingly worried that the global economy could get stuck in a long period of anemic output, given a weak recovery in some rich countries and a slowdown in many of the largest emerging markets that have been key drivers of global growth.

19.04.2015 20:59 Five reasons to be upbeat on world`s economy

Gloom will be on plentiful display in Washington this week when finance ministers and central bankers from around the world gather for economic parleying. The International Monetary Fund, which hosts its spring meetings with the World Bank, has warned of prolonged lower growth that will keep debt high - and could pave the way for another global financial crisis. Christine Lagarde, the IMF managing director, who regularly uses these occasions to parade her worries, will once again be front and center as global Cassandra-in-chief. However, there are five good reasons why the doomsayers are overdoing it. 1) The U.S. is powering its way to recovery, with a generally favorable influence on the rest of the world. 2) The fall in oil prices is almost universally good news for the world economy. 3) News from emerging market economies - despite slower growth - is positive. 4) The firm dollar has been a boon for most countries. 5) Modest growth is resuming in Europe, still home to many of the world`s most technologically adept companies and much R&D brainpower.

19.04.2015 12:52 Russia`s Economy Steps Back from the Brink

It`s been fascinating to watch the Russian economy adjust to sharply lower oil prices. With a little help from the central bank, the country`s recession might not be as bad as previously thought. After an initial period in which the ruble plummeted and inflation surged -- with food prices up 15.4 percent from a year earlier in December -- the Russian central bank`s response is turning things around. A sharp increase in short-term interest rates, currently at 14 percent, has stabilized the ruble and might even be getting consumer prices under control. The episode has taken a toll on Russian living standards. In the first quarter of 2015, inflation-adjusted incomes were down 1.4 percent from a year earlier. Retail sales dropped 6.7 percent -- and individual stores, such as the M Video electronics chain, reported even steeper declines. Imports were particularly hard hit, thanks to the impaired buying power of the ruble: In January and February, they were down 37.9 percent from a year earlier. The government`s finances haven`t fared well, either. Standard and Poor`s predicted that Russia`s fiscal deficit will rise to 4.4 percent this year, higher than the 3.7 percent the government predicts. Still, there are signs that a cheaper ruble might be helping some Russian producers compete with imports. True, industrial production was down 14.6 percent in the first quarter from a year earlier, with the garment industry -- which depends heavily on imported inputs -- taking the steepest plunge. Yet Russian food production was up 3.5 percent, suggesting that import substitution might not be just President Vladimir Putin`s pipe dream.

18.04.2015 13:10 IMF and World Bank: India`s economic growth likely to outpace China in 2015

India`s economic growth clip this year and next will be better than previously assumed, overtaking China in 2015 to become the world`s fastest growing major economy and widening the gap further in 2016, the International Monetary Fund (IMF) and the World Bank have said in separate forecasts. Both IMF and World Bank see India`s growth rising to 7.5 per cent in 2015 from 7.2 per cent in the preceding year, but have different assessments for 2016. IMF, which last January forecast 2015 growth at 6.3 per cent and 2016 growth at 6.5 per cent, has penciled in 7.5 per cent growth next year while World Bank has the 2016 figure higher at 7.9 per cent. The bank had last January pegged the growth rates at 6.4 per cent this year and 7.0 percent in 2016. The numbers will be music to the government`s ears, especially because the Indian economy, while being spoken of in the same breath as China in terms of economic potential, has never managed to surpass its giant neighbor`s growth rate. Even with a higher growth rate, India`s $2-trillion GDP will remain much smaller compared with China`s $10-trillion economy. IMF has pegged China`s growth at 6.8 per cent in 2015 and 6.3 per cent next year while the world economy is forecast to show no material improvement, growing only 3.5 per cent compared with 3.4 per cent in 2014. World Bank sees China growing at 7 per cent in the next two years.

17.04.2015 10:52 IMF says currency shifts support global economic growth

Recent shifts in exchange rates should help the global economy, boosting Japan and Europe in particular, amid increasing divergence in the growth paths of the world`s major economies, the International Monetary Fund said. The Washington-based institution kept its global growth forecasts unchanged, with faster economic expansion in the euro zone and India expected to be offset by diminished prospects in other key emerging markets such as Russia and Brazil. But it cautioned that the economic recovery remains "moderate and uneven," beset by greater uncertainty and a host of risks, including geopolitical tensions and financial volatility. In its flagship World Economic Outlook, the IMF kept its forecast for global growth this year at 3.5 percent. For 2016, the IMF expects global gross domestic product to expand 3.8 percent, up from the 3.7 percent it forecast in January. The headline figures mask a growing split among major economies, in part due to the varying impacts of currency fluctuations and lower oil prices. The sharp rise of the dollar against the euro and yen is expected to be a major theme at the meeting of the world`s top economic policymakers in Washington later this week. The currency moves have exposed some emerging economies as well. The IMF said monetary policies are driving most of the currency movements, as the U.S. Federal Reserve prepares to raise rates while the European Central Bank and Bank of Japan maintain their monetary stimulus. The currency effects should boost global GDP, supporting demand in the still-troubled economies of the euro zone and Japan, the IMF said, raising its forecasts for both regions.

16.04.2015 17:14 IMF worsens Russian economic outlook, GDP to fall 3.8% in 2015

The International Monetary Fund (IMF) now expects Russian GDP to fall 3.8% in 2015, compared with the 3% drop it was expecting in January, the IMF said in its latest World Economic Outlook Update. The IMF estimates the economy grew 0.6% in 2014. It thinks Russian GDP might fall 1.1% in 2016. The previous forecast was for 1% decline. The fall of Ukraine`s real gross domestic product (GDP) is expected to slow from 6.8 percent in 2014 to 5.5 percent in 2015, and it should recover in 2016 when it will rise by 2 percent, according to the World Economic Outlook. CIS economies as a whole might fall 1.4% in 2015 - this is 2.9 pp below the IMF`s previous forecast - and grow 0.8% in 2016, which is 1.7 pp below the previous forecast. Not including Russia, the CIS economies might grow 2.4% in 2015 and 4.4% in 2016, compared with previous forecasts of 4% and 4.6%, respectively. IMF noted the outlook for advanced economies was "improving”, while growth in emerging markets and developing economies was projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. The IMF left its forecast for the world economy, emerging markets and developed countries unchanged.

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