The Lastest Macroeconomic News

02.08.2013 12:33 Recession in Russia is not excluded anymore

Russian manufacturing unexpectedly shrank in July, with a gauge of conditions in the industry falling to the lowest since December 2009 and marking the first contraction in almost two years, according to HSBC Holdings Plc. The HSBC Russia Manufacturing Purchasing Managers` Index fell to 49.2 from a four-month high of 51.7 in June, HSBC said, citing data compiled by London-based Markit Economics. The median estimate of three economists in a Bloomberg survey was for a drop to 50.9. Readings above 50 indicate expansion. Declining production follows a surprise contraction in service industries in June, adding to evidence the Russian economy is slowing. The drop, combined with signs of a weakening labor market and slower inflation, suggests stimulus measures may help revive growth, according to HSBC. This should move forward cuts in key policy rates in Russia, Alexander Morozov, chief economist for Russia at HSBC, said in the statement. Output, new orders and employment - all key PMI indexes - marked significant falls to below the 50 point no-change mark in July. Russia`s economic downward trend is mainly due to the unpredictable economic policy, Russian experts of the Moscow Higher School of Economics stated. In the first half year of 2012, the industrial production grew by 3.1%. By contrast, in the first six months of 2013, the industrial production only increased by 0.1%. Russia`s construction output even was down by 8%.

21.07.2013 12:58 Russia`s economy expanded at a slower pace than expected in the second quarter

Russia`s economy expanded at a slower pace than expected in the second quarter, increasing the likelihood that the country will grow at well under 3 per cent this year. Gross domestic product rose at an annual rate of 1.9 per cent between April and June, Andrei Klepach, the deputy economy minister, said, bringing GDP growth for the first half to 1.7 per cent after a particularly weak start to the year. Analysts blamed the low growth on a slowdown in investment, which accounts for about a fifth of Russia`s GDP, as well as weak external demand from key export markets such as the EU. Russian retail sales are now growing at about 3 to 4 per cent on an annual basis, versus 7-8 per cent this time last year. Meanwhile, both the public and private sectors are more constrained in their ability to raise wages. Analysts expect growth to pick up significantly in the second half of the year, partially thanks to a weak comparative period in 2012, as well as expectations of a strong harvest. At present, analysts forecast the economy to grow at 2.8 per cent for 2013, but Ivan Tchakarov, chief economist at Renaissance Capital, said he expected the consensus forecast to fall to at least 2.5 per cent. If in the first half of the year it`s 1.7 per cent growth, you definitely need a GDP growth of about 3 per cent in the second half in order to get to 2.5 per cent growth for the year, Ivan Tchakarov said.

03.07.2013 18:06 HSBC cuts 2013 growth forecasts for several Latin American economies

Global banking giant HSBC (NYSE: HBC) has slashed its 2013 GDP growth forecasts for several Latin American economies, the bank said in a report. "Latin America is still the two-speed region it has been for some time. Yet, although the starting points differ, growth is decelerating across the board," said HSBC. "Risks - a slowdown in China, wobbles in commodity markets, and a petering out of the domestic demand boom - have turned into actual headwinds." The UK-based bank notes that it has become more difficult for Latin America`s economies to find shelter from these downward pressures. As a result, it is reducing this year`s regional growth forecast to 2.7% from 2.8% last year. Forecast changes for 2013 growth affect Brazil (to 2.4%, from 2.6%), Chile (to 4.5%, from 4.8%), Peru (to 5.8%, from 6.2%), Uruguay (to 3.5%, from 4.0%) and Venezuela (to -0.9%, from -0.6%). Brazil`s GDP growth downgrade by HSBC came almost at the same time as the country released industrial production (IP) figures that cast even greater doubt about the health of Latin America`s biggest economy. Brazilian IP posted a 2% month-on-month contraction in May in seasonally adjusted terms, below the consensus forecast of a 1% contraction. Mexico`s 2013 growth forecast had already been cut by HSBC earlier in the second quarter, to 2.9% from 3.2%. A report this week from HSBC`s Mexican unit also showed that the country`s manufacturing purchase managers` index for June reached its lowest level since the data collection began in April 2011, by falling to 51.3 from 51.7 in May.

03.07.2013 17:23 HSBC now sees Chinese growth in 2013 at 7.4% compared to 8.2% previously

HSBC now sees Chinese growth in 2013 at 7.4% compared to 8.2% previously. For 2014, they see growth at 7.4% compared to 8.4%. "In our view, markets will be disappointed by the continuation of sluggish economic growth. We sense that many investors expect the Chinese government to implement further fiscal stimulus over the summer if GDP growth fails to pick up. Our economists` view is that, since the government is now putting more emphasis on balanced growth and market reforms, it will tolerate GDP growth in the 7-7.5% range and will therefore take no strong measures to boost growth unless there is a risk of growth slowing to 7%", HSBC said. Goldman Sachs also cut its estimate for 2013 Chinese gross domestic product to 7.4% from 7.8%, citing weaker economic indicators and tightening of financial conditions. China has basically said goodbye to 8% GDP growth in spirit if not in statistics and will have to embrace slower growth, with the average annual growth rate in the next seven years to 2020 perhaps falling to the vicinity of 6%, wrote Goldman Sachs China strategist Jiming Ha in a June 10 research report.

16.06.2013 15:51 World Bank Cuts Global Outlook as China Slows

The World Bank cut its forecasts for this year, citing a deeper than expected recession in Europe and a slowdown in China and India. Renewing fears about growth, it said the global economy was likely to grow by 2.2% this year, a downgrade from its January forecast of 2.4%. The World Bank also cut its forecast for growth in 2014 to 3.1% from 3%, but maintained its prediction that global GDP would increase by 3.3% in 2015. "While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted," said Kaushik Basu, senior vice-president and chief economist at the bank. "This is reflected in the stubbornly high unemployment in industrialised nations, with unemployment in the eurozone actually rising, and in the slowing growth in emerging economies." The bank is now predicting the eurozone economy will shrink by 0.6% this year, compared with an earlier forecast of a 0.1% decline in GDP. The currency bloc`s economy is then expected to grow by 0.9% in 2014 and 1.5% in 2015. The World Bank highlighted slowing growth in China, as authorities there seek to rebalance the economy, and said India`s annual growth had dropped below 6% for the first time in 10 years. It said there was concern that the US might begin to ease its support of the world`s largest economy by withdrawing quantitative easing, or the use of central bank cash to buy up sovereign debt in the hope that financial institutions will reinvest the windfall in the wider economy. The bank added that austerity programmes, high unemployment, and weak consumer and business confidence would continue to impede growth in higher-income countries. It downgraded its forecasts for developing countries` GDP to 5.1% this year from an earlier forecast of 5.5%. Growth in 2014 and 2015 is expected to be 5.6% and 5.7% respectively.

25.05.2013 11:19 S&P warns of economic slowdown if Russia fails to improve investment climate

US RATINGS agency Standard & Poor`s (S&P) warned that Russia faced harsh economic times unless the government improved its poor investment climate and implemented long-delayed privatisation and reform. Russia has seen more than a decade of largely uninterrupted economic growth, thanks to its lucrative oil and gas industries, to become the world`s eighth-largest economy. However, now that energy prices had stabilised, experts warn Russia is unlikely to grow as quickly unless it aggressively reforms its economy. S&P said in a report published on Thursday that it expected Russia`s economic growth to slow to 3% this year the slowest rate the country had seen since 1999 and that "growth will remain constrained without structural reforms to support it". The ratings agency`s report adds to a growing list of warnings for the Russian economy. The European Bank for Reconstruction and Development forecasts just 1.8% growth while the country`s own economic ministry predicts 2.4% growth. Even the country`s Economic Development Minister Andrei Belousov has warned Russia risks a recession unless rapid steps are taken. S&P is concerned the authorities would not be ready for tough measures if the economic situation gets worse.

16.05.2013 11:20 Euro area GDP down by 0.2% and EU27 down by 0.1% during the first quarter of 2013

GDP fell by 0.2% in the euro area (EA17) and by 0.1% in the EU27 during the first quarter of 2013, compared with the previous quarter, according to flash estimates2 published by Eurostat, the statistical office of the European Union. In the fourth quarter of 2012, growth rates were -0.6% and -0.5% respectively. Compared with the same quarter of the previous year, seasonally adjusted GDP fell by 1.0% in the euro area and by 0.7% in the EU27 in the first quarter of 2013, after -0.9% and -0.6% respectively in the previous quarter. During the first quarter of 2013, GDP in the United States grew by 0.6% compared with the previous quarter (after +0.1% in the fourth quarter of 2012). Compared with the same quarter of the previous year, GDP rose by 1.8% (after +1.7% in the previous quarter). In March 2013 compared with February 2013, seasonally adjusted industrial production1 grew by 1.0% in the euro area (EA17) and by 0.9% in the EU27, according to estimates released by Eurostat, the statistical office of the European Union. In February3 production increased by 0.3% in both zones. In March 2013 compared with March 20124, industrial production decreased by 1.7% in the euro area and by 1.1% in the EU27.

27.04.2013 13:31 The US economy grew at a pace of 2.5 per cent in the first quarter of 2013

The US economy grew at a pace of 2.5 per cent in the first quarter of 2013, with cuts in government spending offsetting private consumption and investment gains, the Commerce Department says. The first estimate of GDP growth in the first quarter was a solid rebound from the previous quarter`s poor 0.4 per cent pace, but it came in below the average analyst forecast of 2.8 per cent. Consumer spending gained 3.2 per cent, a pick-up from the fourth quarter, and business investment continued to grow, albeit at a slower pace, gaining 2.1 per cent. But federal government spending, hit by the "sequester" budget cuts which took effect during the quarter, continued to drag on the economy, falling 8.4 per cent. US industrial production rose by 0.4 percent in March following an upwardly revised 1.1 percent increase in February, the Federal Reserve said. Economists had expected production to edge up by 0.2 percent. The increase in production in March was largely due to a 5.3 percent jump in utilities output, which came on the heels of a 2.5 percent increase in February. The sharp increase in utilities output more than offset a 0.1 percent drop in manufacturing output as well as a 0.2 percent decrease in mining output. The modest drop in manufacturing output came despite a continued increase in the production of motor vehicles and parts, which jumped by 2.9 percent in March after rising by 2.0 percent in February. The report also showed that the capacity utilization rate edged up to 78.5 percent in March from 78.3 percent in February. While capacity utilization in the utilities sector jumped to 82.9 percent from 78.7 percent, capacity utilization in the manufacturing and mining sectors edged down to 76.4 percent and 87.5 percent, respectively.

08.04.2013 11:04 Russia`s economy expanded by a less-than-expected 1 percent in the first quarter of 2013

Russia`s economy expanded by a less-than-expected 1 percent in the first quarter of 2013, which is likely to force a cut in the growth forecast for the full year, Economy Minister Andrei Belousov said. "The results of the first quarter seem to be worse (than expected)," Belousov told journalists on the way to Hanover as part of an official visit, adding that growth in gross domestic product in the first quarter was probably around 1 percent. He said the ministry would cut the 2013 GDP forecast to below 3 percent in a conservative scenario or to around 3.2 percent in an optimistic one. The ministry had earlier estimated the economy was likely to grow by 3.6 percent this year. It warned at the end of March that it would probably cut its GDP forecast for 2013. "I can say for sure that in our (new) forecast for 2013 we will cut estimates for exports of natural gas, (and) investment estimates will be lowered. Consequently, the pace of GDP growth will also be lowered," Belousov said.

22.03.2013 20:21 Russia`s gross domestice product growth in February slowed to 0.1% year-on-year

Russia`s gross domestice product growth in February slowed to 0.1% year-on-year, Deputy Economy Minister Andrei Klepach said. In January, the country`s GDP grew 1.6% from a year earlier, after rising 2.4% in December. Mr. Klepach was also cited by Prime news agency as saying he believes the financial crisis in Cyprus won`t be resolved soon and the long-term consequences would be serious. He added that monetary policy easing in Russia could be possible in April-May of this year as inflation slows, according to the Prime report. "As (head of Russia`s central bank Sergei) Ignatyev said, there are conditions for it," he said. Russian industrial output shrank in February, contracting by the most in more than three years as mining and utilities production weakened. Output dropped 2.1 percent from a year earlier, when February had 29 days, after a 0.8 percent contraction in January, the Federal Statistics Service in Moscow said. Output dropped 2.1 percent from a year earlier, when February had 29 days, after a 0.8 percent contraction in January, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 19 economists in a Bloomberg survey was a for a 1 percent contraction. Mining contracted 2.2 percent after a 1.2 percent drop in January, the statistics service said. Output at utilities fell 10 percent after a 1.8 percent gain the previous month, while manufacturing fell 0.1 percent, improving from a 0.3 percent decline.

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