The estimate for Russia’s GDP growth between January and March turned out to be much better than the Russian Economic Development Ministry’s preliminary forecast of 1.1% growth.A significant upward revision of wholesale trade figures for the first two months of the year bolstered the figure, according to Oleg Zasov, head of composite macroeconomic forecasting at the Economic Development Ministry.”Rosstat revised wholesale trade dynamics for the first two months considerably. There was [originally] a 3% year-on-year decrease, which turned into a 3% increase, and wholesale trade accounts for around 10% of GDP,” Zasov explained.Despite beating expectations, the announcement still didn’t give much cause for optimism, as “this performance would still qualify as the weakest quarter since 4Q09,” commented Ivan Tchakarov, Chief Economist for Russia & CIS at Renaissance Capital.“This was broadly expected as it is at least partly related to the very high base effect from 1Q12 when the economy grew by almost 5% YoY,” the expert wrote in an e-mail.The outlook for the Russian economy in 2013 has recently grown quite pessimistic, with warnings about a looming recession being voiced by both officials and analysts. Earlier in April Russia’s Minister for Economic Development Andrey Belousov said the country could slip into recession by autumn if stimulus measures were not urgently taken. One of the recent alarm bells came from the Higher School of Economics (HSE), with experts saying that a so-called technical recession has already hit the country.Technical recession is a term used to refer to an economic contraction seen for six consecutive months.This time around the Ministry for Economic Development sounded more optimistic, with Andrey Belousov promising a kind of an “economic miracle” for Russia. He said the economic growth slowdown trend could turn around as early as the third quarter 2013.”We anticipate that there will be a turning point in negative trends already in the second quarter and that economic growth will surpass 3% in the second half of the year,” Belousov specified.Rosstat will give more detailed Q1 GDP data in the middle of June. … Read More
Saving Cyprus: IMF approves $1.3bn rescue package
The IMF has approved a three-year, $1.3 billion loan to jump start recovery in Cyprus and restore financial credibility to its indebted banking industry.The funds will be distributed to stabilize the banking industry, tame the state deficit, and to restore economic growth on the island.The IMF announced on Wednesday it had approved the first $111 million (86 million euro) installment of the loan, which was made immediately available to the Cypriot government. The next installment of $1.3 (1 billion euro) will be wired before June 30th, 2013 and fostered by the European Stability Mechanism, based in Luxembourg.The bailout is part of a $13 billion (10 billion euro) monetary package funded by Troika lenders over the next three years.The financial assistance is intended to prevent a further crisis and to revive the economic pulse of the debt-stricken nation.The loan “is intended to stabilize the country’s financial system, achieve fiscal sustainability, and support the recovery of economic activity to preserve the welfare of the population,” the IMF said in a statement.Klaus Regling, chief of the European Stability Mechanism, said on Monday, “The loans granted by the ESM help to maintain financial stability in the euro area and buy time for Cyprus. This time enables Cyprus to undertake the reforms necessary to rebuild its economy on a sustainable basis.”This is the fourth eurozone loan from the IMF crisis lending fund. Greece, Portugal, and Ireland have all received bail-out support from IMF lending. Taking out loans from the IMF increases the organization’s power in the eurozone. The more debt it owns, the more influence it holds over policy.The IMF is optimistic at Cypriot prospects, but is still cautious about a possible debt relapse.“Challenges ahead are significant, including restoring credibility in the banking sector and reducing fiscal deficits and debt to sustainable levels,” IMF Managing Director Christine Lagarde said of Cyprus.“There is no room for implementation slippages.”On Wednesday, the EU statistics office confirmed the 17 nation eurozone remained in recession with an overall regional contraction of 0.2 percent in the first financial quarter, from January to March. The Cypriot economy shrank by 1.3 percent.Official figures show France has returned to its second recession in four years, as the economy shrank by 0.2 percent in Q1 of 2013, after shrinking the same amount in the final of quarter of last year.The eurozone’s strongest economy, Germany, also showed some sluggish signs of growth. GDP grew by just 0.1 percent in the first quarter, far less than 0.3% expected by economists, showing sluggish signs of growth.The Netherlands, which entered recession three months ago, also showed contraction, with GDP falling by 0.1 percent in the first quarter of this year. Once one of the strongest-looking members of the eurozone, the Netherlands suffers from rising unemployment and the housing market bubble bursting. … Read More
Market Buzz: Record low yen and record high Nikkei to dictate floors
Equities fell for a third day as VTB, the nation’s second-biggest bank, performed poorly.The MICEX dropped 0.1 percent and closed at 1405.76, dropping 10.74 points. The RTS closed at 417.76, closing high and gaining 1.91 percent.The US is to release data on producer price inflation, industrial production, the capacity utilization rate and a report on manufacturing activity in New York State.European market indices finished positive on mixed data. The Euro Stoxx fell 0.22 percent and is sliding on London floors, France’s CAC advanced 0.25 percent, and Germany’s DAX gained 0.72 percent. French GDP data fell more than expected, but a separate Eurostat report showed overall EU industrial production rose by 1 percent, seasonally adjusted. Spanish banks added to big eurozone losses.The FTSE 100, the commodity heavy London index peaked at the end of the day for a strong finish at 686.06, up 0.82 percent.On Wednesday, Germany, France, and Italy are set to release preliminary data on first-quarter GDP growth.Index gains were significant in New York. The S&P 500 soared 1.01 percent by market close, a 10th all-time high in 12 sessions. The Dow Jones closed high, and is already up 0.82 percent on London floors. Bank of America and American Express spearheaded gains, up 2.77 percent and 2.46 percent respectively. The NASDAQ Composite index rose 0.69 percent.The US is to release data on producer price inflation, industrial production, and the capacity utilization rate on Wednesday.In Asian trading Tuesday, Japan’s Nikkei 225 climbed over 15,000 for the first time since January 2008, as the yen hit a 4.5-year low against the dollar.Sony Corp soared 12 percent on the news that billionaire Daniel Loeb will heavily invest in the company’s entertainment limb.Australia’s S&P/ASX 200 advanced 0.36 percent and the Australian dollar dropped to an 11-month low after the Australian Treasurer announced an unbalanced budget deficit through 2016.Hong Kong Hang Seng rose 0.13 percent, and the New Zealand NZSE slightly gained 0.01 percent.Both WTI and Brent are up. WTI added 0. 06 percent to 94.27, but down from Tuesday. Brent has slightly eased 0.20 percent to 102.28 per barrel. … Read More
Treasury Secretary: Deficit reduction is not an economic policy
US Treasury Secretary Jacob Lew said Tuesday that reducing the nation’s deficit should not overshadow the need to boost economic growth and job creation. “Important as the deficit is, it cannot be our guiding star. Deficit reduction alone is not an economic policy,” Lew said in a…
‘We want to survive’: Hundreds protest planned chemical plant in China
“Give me back a beautiful Kunming. We want to survive, we want health, get out of Kunming,” read the banners. Some estimated the crowd to be up to 2,000 strong, but Xinhua news agency reported that around 200 people had gathered to protest. Many wore masks printed with slogans including “No PX in Kunming.” There were no reports of any violence at the protest, which also attracted around 1,000 onlookers. China National Petroleum Corp, the country’s largest oil and gas producer and supplier, announced in February that it had approved the building project. The refinery is set to produce gasoline, diesel, various chemicals and fertilizers, and PX, the company said in its submission to the National Development and Reform Commission. The factory will be located at Anning in Kunming Prefecture, Yunnan Province. It is located 17 miles southwest of Kunming, a city of 6.4 million people. Also on Saturday, police lined the streets of Chengdu – the capital of China’s Sichuan province. The heavy police presence was prompted after residents planned to protest a nearby chemical plant, locals told AFP.”There were a lot of police outside government offices, public spaces and important crossroads in the city,” a resident said. He added that fliers posted around the city in recent days had called for a protest but the government called on people not to demonstrate. Locals said online that the protest did not take place.Saturday’s demonstration in Kunming is the most recent sign that China’s increasingly affluent population has begun to reject the country’s growth model, which is negatively impacting the environment.Last November, the eastern city of Ningbo suspended a petrochemical project after days of street protests. The year prior, protests against a PX plant in the northeastern city of Dalian forced the city government to suspend it.China’s fast pace of industrialization – along with its reliance on coal power and quick growth of car ownership – has been blamed for hazardous smog in Beijing. In January, the city’s air pollution levels reached far beyond the permissible level, prompting local authorities to advise residents to stay indoors. … Read More
Where Is The Recovery? A Higher Percentage Of Americans Had Jobs Three Years Ago
If you think that the latest employment numbers are good news, you might want to look again. In April 2013,58.6 percent of all working age Americans had a job. But three years ago, in April 2010,58.7 percent of all working age Americans had a job. … Read More
‘German eurozone exit what Berlin and bloc needs’
The European Central Bank (ECB) cut its refinancing interest rate to 0.50 per cent on Thursday, in a bid to kick-start the bloc’s sluggish economy. The anticipated cut from 0.75% was the first since July last year, and came on the back of a raft of poor economic news in the 17-member eurozone. Figures released earlier this week showed unemployment in the area at an all-time high, inflation at a three-year low, and manufacturing declining in April.RT: What does this interest rate cut actually mean for the Eurozone? Who does it help? Robert Oulds: It won’t really make much difference at all. Of course we’re seeing the limitations of monetary policy which has been pushed as far as it possibly can, by having interest rates at 0.5%. What it will help is German exports to outside of the Eurozone, particularly to China because there will be some depreciation of the Euro. But of course within the Eurozone there won’t be any change because they have one currency. So it won’t actually help the economies of southern Europe, particularly Spain, Portugal, Ireland, Italy, and Greece, which we can all pound together as countries that are struggling as a result of being in the EU single currency. France is also suffering economically and has, unemployment rising. And we’re seeing a separation between the French and German economies. So cutting interest rates by this small amount won’t actually make much difference. We need a radical change of policy within the EU to bring about economic growth.RT: You’ve been saying that for a long time. It’s not happening though, is it?RO: Well, eventually it will be forced to happen and the euro will collapse. There’s only so much money that can be continually lent to countries like Spain or countries like Italy, which is in a deep recession as well. Of course those countries are too big to be bailed out and of course there will be a capital flight as difficulties continue because investors will be afraid there will be another Cyprus situation happening in other countries and because we’ve already been told that’s going to be the template for future financial rescues of banks and other financial institutions within the Eurozone so eventually, there will have to be a breakup of the euro. That’s the only way to restore economic growth. It’s the only way to get people back to work…if the Deutsche Mark were to be returned, that would increase in value and that would help the disparities within the Eurozone which has been created largely by the currency so there needs to be a radical change. Otherwise, unemployment will just keep on going up.RT: The ECB chief warned indebted countries against ‘unraveling’ their austerity policies. But no one said it was going to be easy. Don’t they have to take the medicine they signed up to?RO: There is beginning a bit of a revolt within the EU against austerity. It doesn’t actually help. It’s actually creating a worse situation where the economies can’t grow and they can’t deal with the long-term debts that they have because there isn’t the tax revenue coming in – it’s actually declining.RT: Does the ECB chief’s comment mean that some countries are getting ready to jump?RO: I think Italy is one to watch. That is a domino that will eventually fall. They’re in a recession and of course the Italians are beginning to get very fed up. There’s mutterings, and as we’ve seen in the recent elections, people are willing to take radical measures and vote for new parties because they’re fed up with the same old establishment parties that have one answer to the problem: austerity. But that of course just creates unemployment. So Spain and Italy are really the ones to watch and perhaps even France in the long-term.RT: Manufacturing shrank across the EU in April – even in Germany, the bloc’s biggest and strongest economy, it contracted for the second month. Why is the EU’s most-powerful member now having trouble?RO: Potentially, because the German economy has relied a lot on exports to other Eurozone states. It’s benefited in the short term from the single currency. But as countries’ economies dry up, the purchasing power in them will of course cease and they won’t be able to afford the German exports any longer. So in the long run, it will damage the German economy because there will be no one in Europe who will be able to buy their cars and their manufactured items. Some Germans are already beginning to recognize this. Professor Bernd Lucke in Germany who has established a political party is saying that Germany should leave the euro because it’s unbalancing the whole single currency. A strong economy like Germany being at the center of the Eurozone and of course in the long run it will actually help the German economy by exiting, because it will allow the other countries in the Eurozone to grow again, and then they’ll be able to afford to buy the German exports. So in the long run, it will actually be in Germany’s interest to exit the single currency because at the moment it’s just destroying everybody else. … Read More
