Macroeconomic News

15.11.2007 22:06 Inflation in Russia in 2007 could exceed 11,0%, GDP growth will reach 7,4% Inflation in Russia in 2007 could exceed 11%, the director of the Economic Development and Trade Ministry`s macroeconomic forecasting department said. Andrei Klepach told journalists that originally, inflation in 2007 was expected to reach 8% attributing the rise to structural factors like price hikes in staple foods, as well as monetary factors. Klepach said inflation in 2008 could exceed the 6-7% forecast. "We are currently specifying the inflation forecast for 2008. It looks like we won`t be within 6-7%," he said. The ministry official also said the Russian government could restrict grain exports in 2008 to curb inflation. "We may impose a direct ban or introduce an export duty," Klepach said adding that measures will depend on the market situation. He said grain exports were 3 million metric tons in October and if this trend continues, the government will consider additional measures to restrict exports. According to the economics ministry forecast, GDP growth in 2007 will reach 7.3-7.4%. 13.11.2007 22:18 Industrial production down by 0.7% in Eurozone, down by 0.5% in EU27 In September 2007 compared with August 2007, seasonally adjusted industrial production1 fell by 0.7% in the euro area (EA13) and by 0.5% in the EU27.

In August production grew by 1.2% in the euro area and by 0.9% in the EU27. In September 2007 compared with September 2006, industrial production rose by 3.5% in the euro area and by 3.1% in the EU27. These estimates are released by Eurostat, the Statistical Office of the European Communities. In September 2007 compared with August 2007, production of energy increased by 0.6% in the euro area and by 0.1% in the EU27.

Capital goods fell by 1.0% and 0.6% respectively. Non-durable consumer goods decreased by 1.2% in the euro area and by 0.8% in the EU27. Intermediate goods declined by 1.3% and 1.2% respectively. Durable consumer goods dropped by 3.4% in the euro area and by 2.6% in the EU27. In September 2007 compared with September 2006, capital goods increased by 5.5% in the euro area and by 5.7% in the EU27. Production of energy grew by 3.6% and 1.9% respectively. Intermediate goods rose by 2.8% in the euro area and by 2.5% in the EU27. Non-durable consumer goods gained 2.3% and 1.5% respectively.

Durable consumer goods grew by 1.3% in the euro area and by 3.1% in the EU27. 10.11.2007 14:41 EBRD expects Russia`s GDP to grow 7.2% this year and 6.5% next year The European Bank for Reconstruction and Development (EBRD) expects Russia`s GDP to grow 7.2% this year and inflation to be 8.5%, the bank`s transition report said. "Growth in Russia is expected to rise to 7.2 per cent in 2007 (from 6.7 per cent in 2006) and then drop back down to 6.5 per cent in 2008," the report said. Russia`s Finance Minister Alexei Kudrin, also a deputy premier, said on Wednesday that GDP growth would be 7.3%. The bank`s expectations on inflation in Russia look far more optimistic than forecasts by the Russian authorities, something EBRD put down to the timing of the report. Earlier this month, the Russian Economic Development and Trade Ministry said annual inflation would exceed the target of 8% and hit 11% instead. Kudrin said it would top 10%. Erik Berglof, chief economist at the EBRD, said the Russian government had only recently revised its inflation forecast after a sharp rise in food prices. He also said the situation in the Russian banking sector had equally affected the Russian forecasts.

06.11.2007 21:48 Economic growth in the US unexpectedly accelerated in the third quarter Economic growth in the U. S. unexpectedly accelerated in the third quarter, as increases in exports, consumer spending and business investment made up for another plunge in home construction. Gross domestic product grew at an annual rate of 3.9 percent, the most in more than a year, the Commerce Department said Wednesday. The quarter included the period when some mortgage and commercial-borrowing costs jumped to six-year highs, prompting some economists to cut growth forecasts and some to warn of recession. Meanwhile, US economy will probably expand at a 1.8 percent pace in the current quarter, according to a forecast of economists surveyed in October. "I don`t expect we`re going to see GDP at all like this in the fourth quarter, but coming from where we`ve been in mid-2007, it won`t be bad," said Richard DeKaser, chief economist at National City Corp. in Cleveland. 02.11.2007 21:55 Eurozone October manufacturing PMI was 51.5 versus 53.2 in September The euro zone manufacturing sector purchasing managers` index was left unrevised at 51.5, its lowest since Aug 2005, sources said of a key survey. The latest reading also represents a steep fall from the 53.2 reading in September but is in line with predictions.

A reading above 50 indicates expansion. A more detailed look at the survey shows the output sub-index was revised up slightly to 52.6 from the original estimate of 52.5, although this is still the lowest reading since Aug 2005. New orders were also revised up a notch to 50.7 from the flash reading of 50.6, but this still represents the lowest level since May 2005. On the prices front the input prices balance was upwardly revised to 59.0, the lowest reading since Aug 2005, from the earlier estimate of 58.9. Output prices came in at 53.2 compared to the flash reading of 53.1. The employment sub index was left unchanged at 51.1, the lowest reading since March 2006. The JP Morgan Global Manufacturing PMI fell to 51.9 in October from 52.6 in September, its lowest level since May 2005. 30.10.2007 20:10 Russia`s GDP grew 7.4 percent in January-September 2007 Russia`s GDP grew 7.4 percent in January-September 2007 compared to 6.6 percent in the first nine months in 2006, Russian Economy Ministry reported today.

The country`s GDP went up 5.6 percent in September 2007 against 6.8 percent in the same month a year earlier. Russia`s GDP is expected to grow 7.7 percent in 2007, Presidential Aide Igor Shuvalov said at the annual meeting of the US-Russia Business Council. He pointed out that Russia`s economy had been rapidly developing and that chances were good that the GDP growth rate for 2007 would exceed that of 6.7 percent in 2006. Shuvalov added that Russia had accumulated considerable gold and currency reserves, and that the size of Stabilization Fund was increasing consistently. He also expressed confidence in the Russian government`s ability to curb inflation and bring its level down to that of the US and other European countries. 26.10.2007 21:34 US new home sales rose 4.8 percent in September 2007 Sales of new single-family homes rose 4.8 percent in September but sales in August were revised down sharply according to a government report on Thursday that painted a mixed picture of the battered housing sector. New single-family home sales set an annual rate of 770,000 units in September, up from a downwardly revised rate of 735,000 in August, the Commerce Department said. Analysts had expected a 10,000 drop from the previously reported 780,000. While sales were weak, the inventory of homes fell and the median sales price rose.

In September, the median sales price of a new home rose 2.5 percent to $238,000 from $232,100 in August, a month that saw the slowest sales pace in 11 years. There were 523,000 new homes for sale at the end of the month, a 1.5 percent drop from August. It would take 8.3 months to clear that inventory at the current sales pace, down from the 9 months supply reported in August. Sales for the month were off 23.3 percent from a year ago. Across the regions, sales were mostly down although the West did see a 37.7 increase.

In the Midwest, sales were off 19.5 percent and down 6.6 percent in the Northeast. Sales were up 0.5 percent in the South. The report comes a day after a realty trade association said sales of previously owned homes fell 8 percent to a record low 5.04 million unit pace amid troubles in the subprime mortgage market. 23.10.2007 20:31 Japan`s industrial output up 3.5 percent in August from the previous month Japan`s industrial output rose by 3.5 percent in August from the previous month, slightly better than previously reported, the government said. An initial estimate last month had shown production growing by 3.4 percent after a dip in July when an earthquake hit automobile production. Shipments increased 4.9 percent in August, against a preliminary reading of a 4.3 percent rise, the Ministry of Economy, Trade and Industry said. Inventories rose a revised 0.2 percent, below the preliminary estimate of a 0.3 percent gain. Japan`s economy, the second largest in the world, is gradually recovering from a slump stretching back over a decade. But there are concerns about the impact of slowing exports to the United States.

A drop in corporate capital investment also caused Japan`s gross domestic product to contract in the second quarter of this year. 20.10.2007 21:28 US September industrial production up 0.1 pct, capacity utilisation 82.1 pct US industrial production rose 0.1 pct in September as a pick-up in manufacturing of business and high-technology equipment offset declines at auto plants and utilities. The Federal Reserve`s report also put September`s plant capacity utilisation rate at 82.1 pct. Analysts were expecting the 0.1 pct rise in production and an operating rate of 82.2 pct. August production was revised down to no change from the 0.2 pct first reported, and capacity use was cut a tenth of a percentage point to 82.1 pct. Utility output fell 0.1 pct in September after the second-warmest August since 1900 had produced a 4.6 pct increase that month. Manufacturing overall was up 0.1 pct last month, rebounding from a 0.4 pct decline in August. Mining output rose 0.2 pct after falling 0.6 pct in August.

Year-on-year, US industrial production was up 1.9 pct last month. 18.10.2007 15:59 Russia`s industrial output increases by 6.6% in Jan-Sept, 3% in Sept Russia`s industrial output went up 6.6 percent in the first nine months of the year as compared to the same period of 2006, the the Federal State Statistics Service reported. In September, the country`s industrial production increased by 3.0 percent versus September 2006. In January-September, growth in the mining of natural resources was 2.2 percent versus the same period in 2006 and the output in Russia`s processing industries increased by 10.0 percent. In the period under review, oil and gas condensate production grew 2.5 percent versus the same period in 2006 and reached 367 million tonnes, production of natural gas in the country decreased by 1.3 percent to 478 billion cubic meters, while coal production went up by 0.6 percent to 225 million tonnes.

According to statistics, electricity generation grew by 1.3 percent in January-September 2007 and reached 731 billion kilowatt-hours, while production of thermal energy reduced by 7.2 percent to 938 million Gcal. In the months under review, production of cars went up by 9.1 percent to 936,000 vehicles, production of trucks increased by 16.3 percent to 206,000 vehicles, and output of buses decreased by 6.8 percent to 61,000 units. In the first nine months of the year, Russia`s bread and baked goods production lowered by two percent to 5.7 million tonnes, meat production increased by 17 percent to 1.8 million tonnes, and production of whole milk goods went up by 1.1 percent to 7.6 million tonnes.