Tuesday, July 17, 2012

Gloomy economic and financial forecasts from the IMF

The world’s becoming a more dangerous place, including for emerging markets. That’s the view of the International Monetary Fund in its latest quarterly reports on the global economy and financial stability.

In the World Economic Outlook update, the Fund cut its 2012 growth forecast from 3.6% to 3.5% and its 2013 forecast from 4.1% to 3.9%. For EMs the cuts are fractionally worse than for the developed world. The biggest changes are in India, where 2012 and 2013 growth figures have been cut by 0.7 percentage points to 6.1% and 6.5%. Brazil comes next, with a 0.6% cut for 2012, to 2.5%.
IMF notably says in its Market Update of its Global Financial Stability Report : "Earlier this year, policy makers across several EM economies were still worried about large-scale capital inflows and excessive appreciation of their currencies. Such fears have given way to concerns about overly rapid depreciation and increased volatility, as currencies like the Brazilian real or the Indian rupee depreciated by between 15% and 25% in less than one quarter.
IMF confirms that Emerging economies isolated from world economic turmoil is a myth.
It is also salient to notice that there is not any sign of optimism in IMFs latest quarterly updates but instead plenty of gloom and doom. Take care !

Tuesday, July 3, 2012

Bad economic news from all over the world

Late Saturday night, the Chinese government published its official manufacturing purchasing manager's index (PMI). It fell to 50.2 from 50.4 in May. Economists were expecting worse, but a decline is nevertheless not great news. China is the second largest economy in the world and it's the world's most important source of growth these days. Key measures including orders and employment all signaled contraction.
The unofficial Chinese PMI number, which is published by HSBC, slipped to 48.2, which was just slightly better the 48.1 that economists were expecting.  The number signaled the fourth straight month of job declines. Input costs were also down.
The euro area didn't have much good news. Italy, France, Germany, and Spain all announced PMI numbers below 50, which means their manufacturing industries are shrinking. Not surprisingly, the most disappointing number came out of Greece where PMI number plummeted to 40.1. Ireland proved to be a surprising bright spot.  Their PMI number jumped to 53.1.
For the most part, other countries announced declines in their PMIs, but those declines were largely in line with dismal expectations. South Korea, Taiwan, the Netherlands, and Vietnam all sent contraction signals.
Last but not least, the U.S. announced an incredibly disappointing drop in manufacturing sentiment. The June ISM number plunged to 49.7 from 53.5 a month ago. Economists were expect a more modest decline to 52.0.
The economic weather is becoming somber…