Global Economy Reviews
02.03.2007 22:37 World Economy Review - February 2007
The International Monetary Fund said the world economy should hold up well in the face of a slowing U.S. economy and should grow by a solid 4.9 percent this year. China`s economy logged blistering growth of 10.7 percent in 2006 - the most since 1995. It is expected to slow somewhat to 9.8 percent this year, according to the country`s central bank.
Brian Bethune, economist at Global Insight, predicted China`s growth would have to slow much more - to around 6 percent or less - to precipitate major economic turmoil. "It would take a major slowdown to upset the Chinese applecart", - he said.
Economists put the odds of a U.S recession this year at about one in five. "It is very rare that business cycles die of old age. It is usually some shock that leads to recession," - said Carl Tannenbaum, chief economist at LaSalle Bank and president of the NABE.
The economy`s last recession in 2001 was preceded by the bursting of a stock market bubble in 2000 that wiped out trillions of dollars in paper wealth. Then came the 2001 terror attacks. The shock this time could come from the housing slump and from the surge in delinquencies and foreclosures for "subprime" borrowers - people with weaker credit records who are considered higher risks especially those who have adjustable-rate mortgages.
"While the probability of a recession is low, it does highlight that the economy will be vulnerable to any shock in 2007. It is worth thinking about and preparing for," - said Mark Zandi, chief economist at Moody`s Economy.com.
Meanwhile, Russia`s economics ministry said it has reduced its GDP growth forecast for 2007 to 6.1% from 6.2%, and for 2009 to 5.9% from 6%. The Economic Development and Trade Ministry also said it has left its GDP growth forecast for 2008 and 2010 unchanged - 5.9% and 6.1%, respectively. It also said inflation in Russia will be at 6.5-7.0% in 2008, 6.3-6.8% in 2009, and 5.8-6.5% in 2010.
01.02.2007 20:30 World Economy Review - January 2007
The economic slowdown in the United States will weaken growth in the world economy from 3.8 per cent in 2006 to 3.2 percent in 2007, according to the Conference Board`s World Outlook - Winter 2007.
The United States is facing tumbling home sales nationally and falling prices in some parts of the country, as well as weaker vehicle and retail sales and orders of durable goods. The Conference Board`s U.S. Outlook - Winter 2007 forecasts that the U.S. economy will have a soft landing, although the odds of a hard landing have increased somewhat over the past 12 months. The United States is expected to avoid slipping into a recession because a weaker U.S. dollar will boost American exports and business investment will remain strong, leading to economic growth of 2.2 per cent in 2007.
After performing relatively well in 2006, economies in western Europe and Japan will weaken in 2007, dragging down global growth. Europe`s real gross domestic product (GDP) is expected to grow by two per cent in 2007, but tax increases in Germany and a stronger euro will negatively affect the short-term outlook. The slowdown in the United States will affect the Asia-Pacific region by slowing Asian exports and weakening real GDP growth from the 5.3 per cent recorded in 2006 to 4.6 per cent in 2007.
The United Nations has also predicted a deceleration of the world economy this year after three straight years of growth with American economy weakening dragged down by softening housing market. The growth of world gross product (WFP) is forecast to moderate its pace to 3.2 percent from estimated 3.8 percent during the last year. The report holds out the possibility of much stronger slowdown in American economy, leading to sustained risks. These include dollar losing its value too fast or inability of the United States to draw outside investments. The economic growth rate in Europe is expected to slow down to 2 percent and in Japan below 2 percent.
02.01.2007 15:37 World Economy Review - December 2006
The US economy grew at an annual rate of 2,5 percent in the fourth quarter of 2006 and will expand at a 2.4 percent pace in the first three months of 2007, according to the median forecast of 80 economists surveyed from Dec. 1 through Dec. 8. Both estimates are down from the previous survey.
The European Commission said recovery in the euro zone was broad-based and sustainable, with domestic demand emerging as the mainstay of economic expansion. The euro area is therefore well placed to face a somewhat less favourable international environment deriving from the US slowdown, - the commission said. The commission said recent developments were consistent with the earlier forecasts putting euro area average growth at 2,6% for 2006, the best performance in 6 years.
Deputy Prime Minister Alexander Zhukov said that Russian GDP grew 6,8% from January to November of 2006. Our economic growth can reach 7,0% in 2006, but the 2007 advance is predicted at no more than 6,0%.
The OECD said in the beginning of December that its composite leading indicator rose to 109.7 in October from a revised 109.5 in September. The September figure was previously given as 109.6. The OECD said analysis of the CLI data points to a weakening of growth in the US and the euro zone in the period ahead, but to improved performance in Japan. For the US, the CLI edged up to 107.7 in October from 107.6 in September, but its six-month rate of change weakened. The CLI for the euro zone rose to 109.4 from 109.1 but its six-month rate of change fell for the fifth month in a row. Meanwhile, the Japan CLI rose to 100.8 from 100.6 and its six-month rate of change improved for the third month in succession. The UK CLI rose to 102.0 from 101.8 and its six-month rate of change improved after being relatively flat since June, the OECD said.
03.12.2006 14:33 World Economy Review - November 2006
The U.S. economy grew at a 2.2% annual pace in the third quarter, a bit faster than the 1.6% initially estimated, but down from the 2.6% in the previous quarter. The economy has grown 3% in the past year in real terms, just about the rate economists say is the long-term potential. In nominal terms, GDP was at an annual rate of $13.33 trillion in the third quarter.
GDP of Eurozone grew by 0.5% in the euro area and by 0.6% in the EU25 during the third quarter of 2006, compared to the previous quarter. Britain recorded 0,7% in economic growth for the third quarter over the previous quarter and 2,7% for the year, the office for National Statistics said in its second estimate this week. De Statis, the German federal statistics office, says this week the GDP of Germany grew 0,6% in the third quarter of 2006. Compared with a year earlier, the GDP in the third quarter of 2006 was up 2.8%.
The Japanese growth data was stronger than expected with a third-quarter GDP increase of 0.5%. Japanese GDP grew 2,0% compared to the third quarter of 2005.
Gross domestic product of Russia had risen 6.8% in January-October 2006, and that GDP growth from October 2005 to October 2006 was 8.2%. Annual GDP in Russia came to 6.9% in the third quarter of the year, compared to the total 6.6% last year.
U.S. economy will not dent the recovery that is gathering pace in Europe, the OECD said in November. The 12-nation euro zone will post 2,6% growth this year and 2,2% in 2007, it predicted, upgrading the previous forecasts of 2,2% and 2,1%. US Economic growth is predicted to be 2,5% in 2007 compared to 3,3% in 2006. GDP in Russia is expected to amount to 6.6% or 6.7% in 2006 and 6,0% in 2007. The industrial production growth estimate for 2006 has been raised from 4.6% to 4.8%, which is likely to lend support to the GDP growth of 6.7%.