Global Economy Reviews

01.08.2007 20:50 World Economy Review - July 2007

Global factory growth eased in July, while production growth slipped to a six-month low, an indicator compiled from national surveys of manufacturers showed. The Global Manufacturing PMI, produced by JP Morgan with research and supply management organisations, slipped to a four-month low of 53.1 in July from 54.4 in June. That is still well above the 50.0 level that divides growth from contraction.
Activity was held back by a gear down in the rate of expansion for production and new orders, with the output index hitting a six-month low of 54.3 from 57.5 the previous month. "The July PMI data suffered a significant setback, all but reversing the impressive uptrend since the turn of the year," said David Hensley at JP Morgan. He said it pointed to sluggish gains in industrial activity through the summer months.
Employment growth also cooled, with that index hitting 51.7 in July from 52.6 the previous month. The index combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia.
Manufacturing in the U.S expanded in July at close to the fastest pace in more than a year as factories received more orders from overseas. The Institute for Supply Management`s factory index slipped to 53.9, lower than forecast, from 56 in June, the Tempe, Arizona, group said. The index matched 2006`s average and any figure higher than 50 signals expansion.
The eurozone`s seasonally adjusted purchasing managers` index (PMI), compiled by NTC Research, was revised up to 54.9 from a provisional estimate of 54.8 but still well down from 55.6 in June and the weakest reading since February 2006.
The International Monetary Fund (IMF) has raised its world economic growth forecast for 2007 and 2008 to 5.2 per cent, up 0.3 per cent from the 4.9 per cent growth forecast for both years in its World Economic Outlook (WEO), published in April. The IMF hiked the growth forecast by 0.3 percentage points on the back of robust growth in emerging markets, with China poised to become its most powerful growth driver. Under the revised estimates, China will see growth of 11.2 per cent in 2007, 1.2 percentage points higher than forecast in April. The IMF also revised India`s growth rate upward by 0.6 points to 9.0 per cent, and Russia`s to 7.0 per cent. The US growth forecast for 2008 was left unchanged at a 2.8 per cent. For Japan, the world`s second-biggest economy, the IMF raised its growth forecast to 2.6 per cent in 2007, up 0.3 percentage points, and to 2.0 in 2008, up 0.1 point. In Europe, the IMF expects the 27-nation euro to expand at a faster rate of 2.6 per cent in 2007 and 2.5 per cent in 2008, up 0.3 points and 0.2 points, respectively.

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01.07.2007 18:07 World Economy Review - June 2007

Russia is likely to revise its GDP growth forecast upwards as it should reach 7 pct in 2007, Russian media reported Economic Development and Trade Minister German Gref said in June. "Soon from now, we`ll see our GDP forecast raised from 6.5 pct to 7 pct for 2007," - he said. "In the first five months this year GDP has risen 7.7 pct year-on-year," - he said.
Also in June, the White House lowered its official forecast for economic growth to 2.3 pct for 2007 from 2.9 pct predicted six months ago. The forecast is compiled by the White House Council of Economic Advisers, the White House Office of Management and Budget and the Treasury Department.
That 2.3 pct growth depends on the expected rebound from quite weak growth in the first quarter. "A variety of indicators signal a faster-growing US economy for the rest of the year", - said CEA Chairman Edward Lazear. "Unemployment remains remarkably low, business inventories are lean compared with sales, and now industrial production is on the rise".
France`s statistics office Insee forecasts 2.1 pct GDP growth for 2007, down slightly from the 2006 growth figure of 2.2 pct, although supported by continuing solid domestic demand.
The Insee GDP figure, given in its quarterly report on the French economy, is marginally lower than the OECD`s estimate of 2.2 pct GDP growth for 2007 and government estimates of 2.25-2.5 pct, and compares unfavourably with the European Commission forecast of 2.4 pct growth. Economy of Eurozone is forecasted to grow by 2.6 pct in 2007.
Japan`s GDP will grow 2.1 pct this year and 2.3 pct next year, the government said. GDP of China is forecast to grow 10.8 percent from a year earlier, the fastest rate since 1995, according to the report of the People`s Bank of China.

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02.06.2007 14:32 World Economy Review - May 2007

A report by the Organization of Economic Cooperation and Development (OECD) published on May 24 says that the world economy is not in for a decline. Despite certain risks, it is growing faster than in the past.
In 2007 and 2008, the economy of the 31 OECD countries would experience a growth in GDP of 2.7%, according to the OECD forecast. Germany would continue to experience strong growth, with GDP set to expand by 2.9% in 2007, and there would be `soft landing` in the US after several boom years. Growth in the US economy was slowing down from 3.3% in 2006 to 2.1% in 2007. Predicted growth for 2008 was 2.5%. Thanks to recovery in Germany and Italy, the Euro zone would experience a growth rate of 2.7% in 2007. In 2008, the predicted growth of 2.3% was above potential growth of 2%.
The Germany economy`s expansion rate would be 2.2% in 2008, 0.6 percentage points above potential growth rate. Growth would remain solid in Japan for 2007, up to 2.4% compared to 2.2% in 2006. Growth in China and India would be buoyant, the report predicted. However, it also warned of risks posed by imbalances in current accounts and, possibly, in financial and housing markets.
The OECD also predicts that Russia will develop more slowly, but still faster than many other countries, and the growth of prices will be much less significant. They believe in 2007 Russia`s GDP will stand at 6.5%, which is the same as in the two previous years. But in 2008, the economic growth will slow down to 5.8%. The inflation, which will slow down to 6.5% for objective reasons by 2008, is making its own contribution to economic stability.

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02.05.2007 15:03 World Economy Review - April 2007

The International Monetary Fund`s World Economic Outlook (WEO), published in April of 2007, predicts that the average world growth rate of 4.9 percent in the period 2003-2006 will continue at least for the next two years.
The WEO forecast 2007-08 released by IMF the US economy growth is expected to come down to 2.2% this year, from 3.3 percent in 2006, which would be the slowest since 2002, when it was recovering from a recession.
Euro zone growth will slow a bit this year after a strong performance in 2006, but the European Central Bank should still lift interest rates to keep inflation at bay, the IMF said. The International Monetary Fund also said it was not clear if this showed a fundamental improvement in the common currency zone`s economic performance, and urged more reform to catch up with the wealthier United States.
"Growth in the euro area is projected to moderate to 2.3 percent in 2007 and 2008, still somewhat above potential," the IMF said in the spring edition of its World Economic Outlook. In its last forecast in September IMF expected Eurozone economies to collectively expand at a 2.0 percent pace this year and next.
Britain should see economic growth of 2.9% this year, also better than the IMF previously thought. Next year, growth in the country should slow a tad and clock in at 2.7%.
Japan continues to recover from a decade-long stagnation. It is expected to post economic growth of 2.3% this year, up a notch from 2.2% last year. Growth should fall back to 1.9%t next year. In China, the economy is expected to grow by around 10% in 2007.
Russia is expected to see economic activity increase by 6.4% this year, compared with 6.7% last year. In 2008, Russia`s economy is expected to grow by 5.9%.

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01.04.2007 16:21 World Economy Review - March 2007

The economic reports, which were published in March 2007, showed the World economy grew moderately in the fourth quarter of 2006.
So, the US economy grew at an annual rate of 2.5 percent in the fourth quarter, according to the "final" estimates released by the Bureau of Economic Analysis. The growth rate was 0.3 percentage point more than in the "preliminary" estimates released in February. In the third quarter, real gross domestic product grew 2.0 percent. For 2006, the annual growth rate was 3.3 percent, compared with 3.2 percent in 2005.
Euro area (EA12) and EU25 GDP both grew by 0.9% in the fourth quarter of 2006, compared to the previous quarter, according to first estimates released by Eurostat, the Statistical Office of the European Communities. In the third quarter of 2006, growth rates were 0.6 percent in both the euro area and the EU25. Compared to the fourth quarter of 2005, seasonally adjusted GDP rose by 3.3 percent in the euro area and by 3.4 percent in the EU25, after 2.7 percent and 3.0 percent respectively for the previous quarter.
The Japan`s economy grew 1.2 percent in real terms in the October-December period, an annualized rate of 4.8 percent, according to a preliminary government report. The quarterly rise marks the eighth straight quarterly increase since the January-March period in 2005, the Cabinet Office report showed.
The Russia`s economy grew 7.7 percent in real terms in the October-December period, according to a preliminary report of The Economy Ministry. In 2006, Russia`s GDP grew 6.8 percent.
Also, The Russian Economy Ministry has hiked the GDP forecast for 2007 by 0.1 percentage points from 6.1 percent to 6.2 percent. The inflation forecast for 2009 and 2010 was lowered from 5.5-6.8 percent to 5.5-6.5 percent and from 5.0-6.5 percent to 5-6 percent, respectively.

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