The OECD slashed its global growth forecasts, warning that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy. In light of the dire economic outlook, the Organization for Economic Cooperation and Development urged central banks to prepare for more exceptional monetary easing if politicians fail to come up with credible answers to the debt crisis.
The Paris-based think-tank forecast in its twice-yearly Economic Outlook that the global economy would grow 2.9 percent this year before expanding 3.4 percent in 2013. The estimate marked a sharp downgrade since the OECD last estimated a rate in May of 3.4 percent for this year and 4.2 percent in 2013.
The euro zone is facing two years of economic contraction, while the United States risks a recession if lawmakers there fail to agree a deal to avoid a combination of tax hikes and budget cuts that will otherwise go into effect next year.
Providing the deadlock in Washington is overcome, the world`s biggest economy will grow 2.0 percent next year, the OECD estimated, cutting its forecast from 2.6 percent in May. "The U.S. fiscal cliff is a very important source of concern, but the greatest downside risk remains the euro zone," OECD chief economist Pier Carlo Padoan told Reuters in an interview.
"The reason for that is not only recession, but also the fact that different negative policy (feedback) loops between sovereign debt, the banking situation and exit risks remain. So the overall zone remains in a state of fragility." Cutting its estimates, the OECD forecast that the euro zone economy would contract 0.4 percent this year and another 0.1 percent next year, only returning to growth in 2014 with a rate of 1.3 percent. The OECD warned that diverging financing conditions within the European monetary union threaten to pull it apart if policymakers fail to get a grip on the debt crisis.
"The euro area, which is witnessing significant fragmentation pressures, could be in danger," Padoan wrote in a foreword to the outlook, urging politicians to overcome deadlock over a single European Central Bank-led bank supervisor.
Given the weakness of the global economic outlook, the OECD warned governments against being too zealous in their belt-tightening efforts and recommended that Germany and China even pursue temporary stimulus spending to revive growth
Economy of the United States
The U.S. economy grew at a faster 2.7 percent annual rate from July through September, although the strength may fade in the final months of the year. The Commerce Department says growth in the third quarter was much better than the 2 percent rate estimated a month ago and more than twice the 1.3 percent rate logged in the April-June quarter. The two biggest factors in the upward revision were larger gains in business stockpiles and a boost in export sales. That offset weaker consumer spending.
Economists believe growth is slowing to a rate below 2 percent in the current October-December quarter because of disruptions from Superstorm Sandy and worries about sharp tax increases and spending cuts that would occur in January without a budget deal in Washington.
Industrial production declined 0.4 percent in October after having increased 0.2 percent in September. In October, the index for manufacturing decreased 0.9 percent; excluding storm-related effects, factory output was roughly unchanged from September. The output of utilities edged down 0.1 percent in October, and production at mines advanced 1.5 percent. At 96.6 percent of its 2007 average, total industrial production in October was 1.7 percent above its year-earlier level. Capacity utilization for total industry decreased 0.4 percentage point to 77.8 percent, a rate 2.5 percentage points below its long-run (1972-2011) average.
The US trade deficit was a smaller than expected $41.5 billion in September 2012, which was down from a revised $43.8 billion (was $44.2 billion) in August. The deficit in September was smaller than market expectations for a $45.0 billion shortfall and well below the implied deterioration to $45.9 billion underlying the net trade contribution in the advance third-quarter 2012 GDP report. Exports rose by $5.6 billion (3.1%) in September while imports rose a smaller $3.4 billion (1.5%). On a volumes basis, exports were up 3.1%, and imports up 1.2%, thereby resulting in an improvement in the volume trade gap (in constant 2005 dollars) to -$46.8 billion from -$48.2 billion in August.
The improvement in the trade balance in September left the deficit well below what was assumed by the Bureau of Economic Analysis (BEA) when compiling its advance third-quarter 2012 GDP estimate. Along with indications that construction spending and the build in business inventories were also stronger than assumed, the data to date are pointing to an upward revision to GDP growth in third quarter of 2012, potentially to above 2.5% from the 2.0% increase in the advance report.
U.S. consumer prices rose in October as the cost of shelter surged by the most in over four years, while gasoline prices fell in a boost for consumer spending power. The Consumer Price Index increased 0.1 percent last month, in line with analysts` expectations, data from the Labor Department showed. The data still pointed to only modest inflation pressures that appear unlikely to derail the U.S. Federal Reserve`s plan to keep interest rates low for an extended period. Prices for shelter, which include rent, rose 0.3 percent during the month, the most since 2008, and accounted for over half of the overall increase in the CPI. That could be a hopeful sign for the economy if it is because landlords felt they have more leverage to raise rents. Rents for primary residences rose 0.4 percent. Gasoline prices fell 0.6 percent in October after climbing 7 percent the prior month. That was the first drop in gasoline prices since June. Higher costs at the pump have forced many American consumers to cut back on other spending.
A measure of underlying inflation was relatively muted. The core CPI, which excludes food and energy prices, increased 0.2 percent. In the 12 months to October overall consumer prices increased 2.2 percent, up a tenth of a point from September`s reading. Core prices rose 2 percent in the year through October.
Economy of the European Union
GDP fell by 0.1% in the euro area (EA17) and increased by 0.1% in the EU27 during the third quarter of 2012, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the second quarter of 2012, growth rates were -0.2% in both zones. Compared with the same quarter of the previous year, seasonally adjusted GDP fell by 0.6% in the euro area and by 0.4% in the EU27 in the third quarter of 2012, after -0.4% and -0.3% respectively in the previous quarter.
In September 2012 compared with August 2012, seasonally adjusted industrial production fell by 2.5% in the euro area (EA17) and by 2.3% in the EU27, according to estimates released by Eurostat. In August production increased by 0.9% and 0.5% respectively.
In September 2012 compared with September 2011, industrial production dropped by 2.3% in the euro area and by 2.7% in the EU27. In September 2012 compared with August 2012, production of durable consumer goods fell by 4.3% in the euro area and by 3.7% in the EU27. Capital goods decreased by 3.0% and 2.6% respectively. Non-durable consumer goods declined by 2.8% in the euro area and by 2.1% in the EU27. Intermediate goods dropped by 2.0% and 1.7% respectively. Production of energy fell by 1.8% in the euro area and by 2.6% in the EU27.
Among the Member States for which data are available, industrial production fell in eighteen, rose in four and remained stable in the Netherlands. The largest decreases were registered in Ireland (-12.6%), Portugal (-12.0%), Greece (-4.4%), Sweden (-3.4%), Spain and Latvia (both -2.8%) and France (-2.7%), and the highest increases in Estonia (+2.0%) and Slovakia (+1.4%). In September 2012 compared with September 2011, production of intermediate goods fell by 4.0% in the euro area and by 4.1% in the EU27. Non-durable consumer goods dropped by 2.3% and 1.8% respectively. Production of energy declined by 1.6% in the euro area and by 2.8% in the EU27. Durable consumer goods decreased by 1.2% and 3.0% respectively. Capital goods fell by 0.8% in the euro area and by 1.2% in the EU27.
Among the Member States for which data are available, industrial production fell in seventeen and rose in six. The largest decreases were registered in Ireland (-12.8%), Portugal (-8.8%), Greece (-7.5%), Spain (-7.0%) and Italy (-4.8%), and the highest increases in Slovakia (+13.0%), Estonia (+8.3%) and Lithuania (+8.0%).
The first estimate for the euro area (EA17) trade in goods balance with the rest of the world in September 2012 gave a 9.8 bn euro surplus, compared with +1.7 bn in September 2011. The August 2012 balance was +5.2 bn, compared with -5.9 bn in August 2011. In September 2012 compared with August 2012, seasonally adjusted exports fell by 1.1% and imports by 2.7%. These data are released by Eurostat, the statistical office of the European Union.
The first estimate for the September 2012 extra-EU27 trade in goods balance was a 12.6 bn euro deficit, compared with -10.9 bn in September 2011. The August 20122 balance was -13.2 bn, compared with -22.5 bn in August 2011. In September 2012 compared with August 2012, seasonally adjusted exports decreased by 1.5% and imports by 1.7%.
Euro area annual inflation is expected to be 2.2% in November 2012. Euro area annual inflation was 2.5% in October 2012, down from 2.6% in September. A year earlier the rate was 3.0%. Monthly inflation was 0.2% in October 2012. EU annual inflation was 2.6% in October 2012, down from 2.7% in September. A year earlier the rate was 3.4%. Monthly inflation was 0.3% in October 2012.
The euro area (EA17) seasonally-adjusted unemployment rate was 11.7% in October 2012, up from 11.6% in September. The EU27 unemployment rate was 10.7% in October 2012, up from 10.6% in September. In both zones, rates have risen markedly compared with October 2011, when they were 10.4% and 9.9% respectively. Eurostat estimates that 25.913 million men and women in the EU27, of whom 18.703 million were in the euro area, were unemployed in October 2012. Compared with September 2012, the number of persons unemployed increased by 204 000 in the EU27 and by 173 000 in the euro area. Compared with October 2011, unemployment rose by 2.160 million in the EU27 and by 2.174 million in the euro area.
Among the Member States, the lowest unemployment rates were recorded in Austria (4.3%), Luxembourg (5.1%), Germany (5.4%) and the Netherlands (5.5%), and the highest in Spain (26.2%) and Greece (25.4% in August 2012).
Economy of Japan
Japanese gross domestic product fell in the last quarter, preliminary official data showed. In a report, Cabinet Office said that Japan`s GDP fell to a seasonally adjusted -0.9%, from 0.2% in the preceding quarter. Analysts had expected Japan`s GDP to fall -0.9% in the last quarter.
Japan`s industrial output unexpectedly expanded in October after suffering a sharp decline the previous month. Japan`s industrial production rising 1.8% in October on a seasonally adjusted basis from the level seen in September. The increase came against expectations of a 2.2% drop in a Dow Jones Newswires survey, and marked a sharp swing from a 4.1% decline in September.
The industries that contributed to the improvement were electronics, fabricated metals and transport equipment such as motor vehicles, according to the Ministry of Economy, Trade and Industry. On a year-on-year basis, however, industrial output dropped 4.3% in October. A survey of production forecasts showed expectations of a 0.1% month-on-month decline in November, followed by a 7.5% jump in December.
According to the Ministry of Finance, Japan`s Merchandise Trade Balance Total came in worse-than-expected at -549 bn yen (-360 bn yen cons), while the Adjusted Merchandise Trade Balance saw a worse than expected outcome at -959.05 bn yen for October (-492bn yen cons). Japanese exports were also reported to have plunged 6.5% (-4.9% cons). Traditionally, poor Japanese trade data is interpreted as JPY negative, as it increases the odds of more easing from the Bank of Japan.
Japan`s national consumer prices index in October recorded an actual of -0.4%, compared with a previous reading of -0.3% a year earlier, while analysts` expectations were -0.4%. Meanwhile, National Consumer Price Index Excluding Fresh Food recorded an actual of 0.0% in October, compared with analysts` expectations and previous reading of -0.1%.The National Consumer Price Index Excluding Food, Energy reading recorded an actual of -0.5 in October, compared with a previous reading of -0.6% and expected -0.5%.
The unemployment rate in Japan was a seasonally adjusted 4.2 percent in October, the Ministry of Internal Affairs and Communications said - in line with expectations and unchanged from the previous month. The participation rate was 59.4 percent, also matching expectations and up from 59.3 percent in September.
The number of employed persons in October was 63.21 million, up 130,000 or 0.2 percent from the previous year. The number of unemployed persons in October was 2.71 million, down 180,000 or 6.2 percent from the previous year.
Economy of Russia
Russia`s gross domestic product slowed to 2.9% in the third quarter from 4.8% in the same period a year ago, preliminary data from the Federal Statistics Service showed. That exceeded a 2.8 percent median forecast of 15 economists in a Bloomberg survey, which was also the level of growth estimated by the Economy Ministry last month. The economy ministry had earlier predicted that GDP would grow 2.7% in the third quarter and 2.9% in the fourth quarter after the economy grew by 4% in the second quarter.
According to Rosstat, industrial production growth continued to slide, decreasing to 1.8% YoY in October (from 2.0% YoY in September). As well as being the lowest print since April this year, it is also significantly below the consensus forecasts of 2.5% (BBG and Interfax) and our estimate of 2.9%. SA industrial production declined 0.7% MoM.
The detailed breakdown reveals softer growth in manufacturing of 3.0% YoY (3.3% YoY in September) reflecting weaker performances from metals: steel -0.6% YoY (+9.7% YoY) and iron -1.1% YoY (+5.4% YoY). At the same time, growth advanced in the production of passenger cars to 11.3% YoY (5.6% YoY), plastic to 8.8% YoY (- 5.8% YoY) and construction-related goods. Meanwhile, mining advanced to 2.1% YoY (from 1.8% YoY) despite gas production returning to a decline last month of 4.3% YoY (+2.6% YoY). The growth in utilities was still in negative territory at -0.6% YoY (-0.9% YoY).
Although technical factors were supportive last month (October contained 23 working days in 2012, two more than in 2011, and the base effect was also favorable), the IP headline print was mainly dragged down by export-oriented industries. The recent improvement in these industries proved to be short-lasting. In October, gas production contracted again after a month of a growth in September. This was combined with a decline across the board within metals. In addition, the performances of sectors focusing on internal demand showed resilience, with the production of passenger cars and construction materials rising.
The IP report revealed ongoing adverse conditions on the supply side and so coincides with the recent concerns about the growth outlook expressed by the CBR. The weak reading supports our view for end of rate hiking cycle; to recap, we expect the next step (easing of policies) in late 1Q13-early 2Q13.
The Bank of Russia expects the economy to grow by 3.5%-4.0% in 2012, while the economy ministry`s forecasts stands at 3.5%. In 2011, Russia`s GDP grew by 4.3%. The weakening economy presents a challenge to President Vladimir Putin, who returned in May for a third term in the Kremlin promising to create 25 million new jobs and boost investment. Droughts ravaged crops across southern and central Russia this year, while slowing growth in China and a slump in Europe curbed demand for shipments of oil, gas and metals.
Обновлено (22.04.2013 00:17)