The traditional "leaders' family photo" on
the final day of the Asia-Pacific Economic Cooperation (APEC) Summit in
Bali today. Photograph: DENNIS M. SABANGAN/AFP/Getty Images
Live
Sort by:
Latest first
Oldest first
Auto update:
On
Off
Larry's story on the IMF being more pessimistic about the global economy is now online. It begins:
Badly handled budget cuts in the United States and a slowdown in
activity in big developing countries mean the global economy will expand
more slowly than expected this year, the International Monetary Fund
said.
Revising down its forecasts for growth in both 2013 and 2014, the
fund warned that the risks were that the performance could be even more
lacklustre and said the Federal Reserve, the American central bank,
needed to take special care as it contemplated reducing its colossal
stimulus to the world's biggest economy.
The IMF now expects the global economy to expand by 2.9% in 2013 and
3.6% in 2014 – down by 0.3 and 0.2 points respectively on its last set
of predictions made in July- despite signs of recovery in the euro area.
IMF deputy director of research, Jörg Decressin, said Europe looks
stronger because there is less fiscal consolidation this year than in
2012; even peripheral countries should emerge from recession over the
next year.
Decressin added that a strong banking union is "absolutely critical" to tackle financial fragmentation.
Updated
IMF: UK upgrades don't mean we were wrong
Olivier Blanchard also defended the IMF's warning six months ago
that George Osborne was playing with fire with his austerity programme. Is the IMF admitting that Osborne was right?
Blanchard replies that the IMF has been "pleasantly surprised by the
fact that growth was stronger" than expected; but insists that it that
"doesn't settle the debate" on fiscal policy, adding:
It doesn't tell if the pace of fiscal consolidation was wrong... or
whether growth could have come back earlier with a different fiscal
framework.
He added that the IMF's job is to warn about risks; that's what they did.
I suspect this won't spare the IMF some robust criticism from Osborne's supporters:
IMF press conference Photograph: /IMFIMF chief economist Olivier Blanchard has been enlarging on the Fund's view of the consequences of the looming US debt crisis, in the ongoing Q&A (which is online here):
If the debt ceiling is not lifted then there's a direct effect on
government spending, which would have to be cut quite drastically...
In addition, it would probably lead to a lot of financial turmoil: if
there was a problem lifting the debt ceiling, it could well be that
what is now a recovery could turn into a recession, or even worse.
(via Observer economics editor Heather Stewart)
Labour shadow chancellor Ed Balls's responds to the news that Britain's growth forecasts have been upgraded by the IMF, and by more than any other major economy:
After three wasted years of flatlining it’s good that we finally have
some growth. But this is the slowest recovery for 100 years and working
people are worse off as prices continue rising faster than wages.
Despite these welcome changes to its forecasts the IMF rightly warns
that the UK economy will remain below potential for many years. That’s
why the IMF has repeated its view that the Government should bring
forward infrastructure investment now, which could be used to build
thousands of affordable homes.
Instead of more complacency from George Osborne we need action to
secure a strong and sustained recovery, catch up all the lost ground and
tackle the cost of living crisis.
Here's a table showing how the IMF expect major economies to perform this year and next year
United States 1.6%, then 2.6%
Euro Area –0.4%, then 1.0%
Germany 0.5%, then 1.4%
France 0.2%, then 1.0%
Italy –1.8%, then 0.7%
Spain –1.3%, then 0.2%
Japan 2.0%, then 1.2%
United Kingdom 1.4%, then 1.%
Canada 1.6% ,then 2.2%
Updated
Here's economics editor Larry Elliott's news story on the IMF predicting stronger growth in the UK this year and in 2014:
The IMF is also more upbeat about the conditions in the eurozone. It
now predicts that the eurozone economy will shrink by 0.4%, not by 0.5%
as in July. It still expects growth of 1% in 2014.
IMF: US must raise debt ceiling
The IMF is warning the US government to raise its debt ceiling soon, and end the federal government shutdown.
A press conference is underway, and chief economist Olivier Blanchard
is telling reporters that failure to raise the debt ceiling would be "a
major event"; a prolonged failure would "almost certainly derail the US
recovery".
The IMF also warns America to slow the pace of its deficit reduction
programme. The planned US fiscal consolidation is "too large, and too
arbitrary", he added.
Treasury hails upgraded UK growth forecasts
The UK Treasury has cheered the news that the IMF has upgraded its growth forecasts for Britain.
A spokesperson for the Treasury said:
The IMF has confirmed that the UK economy is turning a corner, by
revising up its forecast for growth over the next two years by more than
for any other G7 economy.
But risks to the global economy remain high, and the recovery cannot
be taken for granted. That is why the government will not let up in
implementing its economic plan, which has already cut the deficit by a
third, kept interest rates near record lows and created over a million
and a quarter jobs.
Worth noting, though, that the IMF still wants the British government
to take advantage of current low borrowing costs for long-term
investment.
It said:
In an environment of still low interest rates and underutilisation of
resources, public investment can also be brought forward to offset the
drag from planned near-term fiscal tightening, while staying within the
medium-term fiscal framework.
IMF releases world economic outlook
Breaking: The International Monetary Fund has raised its growth forecasts for the UK, in its new World Economic Outlook.
The Fund now expects the UK economy will expand by 1.4% in 2013, an
upgrade of 0.5 points. Next year, it sees growth accelerating to 1.9%,
up by 0.4 points. Quite a boost for chancellor George Osborne.
However, the IMF has has downgraded its forecasts for the global
economy. It now expects growth of 2.9% this year, down from 3.1%. Next
year it expects growth of 3.6%, down from 3.8%. More to follow
Global growth is too weak, risks remain tilted to the downside,
global trade is weakening and the economic outlook suggests growth is
likely to be slower and less balanced than desired.
Here's a photo of Greek journalist Costas Vaxevanis arriving at court in Athens for a new trial over the Lagarde list of alleged tax evaders, which he published. Photograph: LOUISA GOULIAMAKI/AFP/Getty ImagesAs explained at 12.16pm, the Greek authorities are appealing Vaxevanis's acquittal.
Slovenia's central bank governor: We might need some assistance
Bostjan Jazbec, the governor of Bank of
Slovenia, at today's press conference in Ljubljana. Photograph: JURE
MAKOVEC/AFP/Getty ImagesThe central bank governor of Slovenia has hinted that the
country could be forced to seek international help to clean up its
banking sector, Reuters reports. Bostjan Jazbec was asked about the possibility of
asking for aid, during a press conference on the bank's new
macroeconomic forecasts in Ljubljana today. He replied:
That is possible if yields on Slovenian securities remain high.
Jazbec added that the Slovenian government is trying to bring its borrowing costs down, but cautioned:
If that is not successful then there is a possibility to ask for help within various programmes.
Slovenia has been keeping a low profile for some months -- after
Cyprus blew up, it was being talked about as the next candidate for a
eurozone bailout. It's problem is that the country's banks, mainly state
owned, are laden with around €7.5bn of bad loans -- over a fifth of
itsGDP. Yesterday,
interior minister Gregor Virant told reporters that Sovenia could use
the European Stability Mechanism to overhaul its local banks. A decision isn't expected until bank stress test results arrive, in November.
Slovenia's 10-year bonds, the benchmark for market access, are
trading at yields of 6.6% to 6.8% today. Typically, the 7% level is seen
as crucial. If yields don't drop, Jazbec and colleagues could soon be badgering Europe for help. Bostjan Jazbec (centre-right) and deputy governor Mejra Festic (centre-left). Photograph: JURE MAKOVEC/AFP/Getty Images
Greece gripped by Lagarde case and Tsochadzopoulos sentence
Over in Greece there is much ado over two court trials this morning as the journalist who revealed the infamous Lagarde list
of suspected tax evaders takes the stand again and Greeks digest the
news of the imprisonment of the country’s former top socialist
politician Akis Tsochatzopoulos.
Our correspondent Helena Smith reports:
Hundreds of people piled into building number 9 to hear the retrial of Kostas Vaxevanis
- the journalist who took the political establishment by storm last
year publishing the names of more than 2000 suspected tax evaders
included in the infamous Lagarde list.
The trial, demanded by a public prosecutor after an earlier judgment
acquitting Vaxevanis of breaching privacy was deemed to be flawed, comes
at a pivotal time following the 20-year prison sentence handed down
last night to the country’s former defence minister Akis
Tsochadzopoulos.
The landmark verdict has sent tremors through the political scene
with commentators describing the ruling as the most important of the
last 20 years. Tsochadzopoulos, who until his arrest was a prominent
socialists in the Pasok party he also helped co-found in 1974, was found
guilty on Monday of pocketing around €55m in bribes culled from
kickbacks given in weapons purchases.
In a trial that lasted more than five months, the court heard how the
former socialist strongman oversaw an ornate offshore money-laundering
network that enabled him to build an empire of illegal wealth. In a
letter released to the public today, Tsochadzopoulos accused the court
of “derailing from the law and justice,” saying he not only did not
recognize it but would appeal the verdict immediately.
How Greeks will react to the judgment remains to be seen: although
years of impunity has meant that most are eager to see justice being
meted out to corrupt politicians, the vast majority view Tsochadzopoulos
as being just the tip of the ice-berg. It is questionable whether his
imprisonment will sate their thirst for punishment.
Greek former defence minister Akis
Tsohatzopoulos leaving the Athens court last night after being sentenced
to 20 years in jail. Photograph: PANAYIOTIS TZAMAROS/AFP/Getty Images
And in a third Greek courtroom, the trial of Golden Dawn MP Costas Barbarousis,
who was due to stand trial on Tuesday along with another 10 members of
the ultranationalist party, has been postponed to November 10. The Kathimerini newspaper reports that the case was delayed as three of the defendants did not have legal representation in court.
Another signal that global trade is faltering -- Germany's BGA trade
association has slashed its forecast for export growth in 2013 to below
1%, from 3%.
BGA president Anton Börner told Reuters:
We can't achieve 3 percent growth anymore. We now expect ... growth of less than one percent.
There is a whole bunch of factors slowing us down.
Börner cited the turmoil in the Middle East, the US government
shutdown, signs of financial strife in emerging markets and the
eurozone's weaknesses, adding:
If things go badly, we will see stagnation at best. If they are resolved, there could be decent growth.
German industrial orders drop
Germany has fanned fears over the strength of global trade by reporting a drop in industrial orders.
The German finance ministry says industrial orders fell 0.3% in
August, adding to the 1.9% slide seen in July. Economists had expected a
bounce-back.
Overseas orders slid by 2.1%, or 2.9% within the euro region, showing
that Germany suffers from the weak demand in other nations. Orders for capital goods (such as large machinery) from other euro members tumbled by 9.2%.
The German economic ministry tried to put a positive spin on the
figures, pointing out that demand for capital goods within Germany jumped by 4.7%. That suggests domestic investment activity is picking up.
And if you compare the July-August period to the previous two months,
total industrial orders were actually up 0.2%. However, again, that was
driven by domestic demand (+2.7%). Not a bad thing -- but foreign
orders were still down by 1.7%. It rather reinforces this morning's warning from Asia-Pacific
leaders that "Global growth is too weak, risks remain tilted to the
downside, global trade is weakening" (see full statement in the opening post).
A group photo session at the Asia-Pacific Economic Cooperation (APEC) forum in Bali today. Photograph: Dita Alangkara/AP
Back to Bali, where America says it hasn't given up hopes of a new trade deal, called a Trans-Pacific Partnership (TPP) , hours after world leaders warned that global trade is slowing.
US trade representative Michael Froman told reporters that the TPP
trade pact could be agreed by the end of the year. That optimism comes
despite a range of hurdles including intellectual property to
state-owned enterprises, labour and the environment.
Froman told reporters:
I think there is a consensus that there has been substantial progress
on outstanding issues and there are still remaining issues that must be
addressed.
Analysts fear that President Obama's absence from the Asia-Pacific
forum in Bali will weaken America's diplomatic punch at the summit. It
has left secretary of state John Kerry to wave the flag for the US among
other world leaders:
Updated
Ireland's next austerity budget may be less harsh
Over in Ireland, finance minister Michael Noonan has dropped the
heaviest of hints that next week's austerity budget will take up to a
half a billion euros less out of the Republic's economy than previous
ones during the financial crisis.
Our correspondent in Dublin, Henry McDonald, has the story:
Speaking on the way to a Cabinet meeting in Dublin this morning,
Michael Noonan said that €2.5bn is to be taken out of the economy in the
budget and not the projected €3.1bn. Noonan predicted that a resurgent Irish economy would make up for the remaining €600m, through extra tax revenues.
Despite his announcement, Budget 2014 is likely to again contain
unpopular measures as the Fine Gael-Labour coalition seeks to drive down
Ireland's national debt and keep in line with the financial recovery
programme imposed by the IMF and Europe since the Republic was bailed
out from the brink of insolvency. Fellow Cabinet ministers still bracing themselves for more
cuts to areas such as a social welfare where around €440m will probably
be taken out of spending.
The budget comes less than a fortnight after Enda Kenny's government
sustained a massive electoral blow when the country's voters rejected
the coalition's proposal to abolish the Republic's second parliamentary
chamber, the Seanad.
Portraying this budget as not as harsh as the previous ones in recent
years is part of a government strategy to convince voters that the
Coalition remains on course to steer the economy towards full recovery.
As always it will be economic competence and the perception that things
are getting better that provide the best hope for the coalition to
survive into the next general election.
WSJ: New documents lift lid on Greek bailout blunders
The ancient Temple of Parthenon atop the Acropolis hill on October 4, 2013. Photograph: ARIS MESSINIS/AFP/Getty Images
The Wall Street Journal has today published new information which
confirms what many observers and combatants in the eurozone crisis have
long suspected – that the 2010 bailout of Greece badly botched, contributing to the country's subsequent woes.
With a third aid package for Greece looming, the WSJ has got its
hands on a cache of documents marked "Secret" or "Strictly Confidential"
which show how the International Monetary Fund struggled to tackle the
Greek problem three years ago.
Crucially, the document shows that some IMF members were pushing for a
debt write-offs in 2010 - something which finally happened in Greece's
second bailout, after Eurozone banks had the chance to offload their
Greek bonds. The 2010 documents show that several IMF directors were
deeply skeptical of the staff's economic projections from the beginning,
calling them "rather optimistic," "overly benign," even "Panglossian.",
the WSJ reports.
And while the IMF presented a united face in public, there was
pitched argument and dispute behind the scenes about the wisdom of the
2010 bailout plan -- which forced tough austerity onto Greece in return
for loans, but without tackling its overall debt pile.
The IMF documents show there were heated discussions about the need
to write off part of Greece's debt from the start. At the May 2010
meeting, directors from Middle Eastern, Asian and Latin American
countries repeatedly asked why they weren't being presented with the
option.
European directors were "surprised" when Switzerland "forcefully"
weighed in on the dissenting side, the minutes show. "Why has debt
restructuring and the involvement of the private sector in the rescue
package not been considered?" the Swiss executive director, Rene Weber,
asked at the time.
The IMF says today that debt restructuring simply wasn't feasible in
2010, because the risk of Greece's financial turmoil spreading to other
countries was so high.
Much of the debt was held by already fragile French and German banks,
so European nations wouldn't consider it. And the U.S. feared its own
trillion-dollar exposure to European banks.
Ms. Lagarde was French finance minister at the time and keen to avoid
losses by her country's banks, which had lent heavily to Greece. Mr.
Strauss-Kahn—widely known to be angling for the French presidency at the
time—backed off a tentative effort to press the issue after
encountering European opposition before the IMF meeting.
Back in June the IMF admitted that mistakes were made in 2010, when
it published its own review of the bailout. These documents confirm it.
Updated
Italy's bad bank debts rise again
Italy's banks remained lumbered with bad debts in August, new data from the Bank of Italy shows.
The number of non-performing loans across the sector was 22% higher than a year ago, matching July's rate.
As this graph shows, the amount of toxic debts on the books of Italian banks rose steadily through its recession: Photograph: BOI (via twitter user @cigolo)
Italian lenders continue to rein in credit too -- despite the ECB's
efforts to encourage it. Lending to households is 1.2% lower than a year
ago, while the cost of loans to companies rose. A loan of up to €1m
cost 4.5% on average, up from 4.41% in July.
Updated
The political row over the sale of Royal Mail is set to continue
today, with news that the flotation of the historic organisation is
proving a resounding hit with the public, and the City.
There's such demand that Royal Mail shares are on track to be priced at the very top of the official range, 330p each.
Good news if you get a slice of the action (the float closes at midnight, folks). And as we reported last night, the government is making more shares available to the public, rather than letting hedge funds and speculators devour the lot.
But even at 330p each, there'll be a massive storm if – as appears likely – the share price spikes to 400p when trading begins. As my colleague Nils Pratley puts it,
There is a real risk that the public purse could be royally short-changed in the Royal Mail privatisation.
Mike van Dulken, head of research at Accendo
Markets, says the City's patience is running thin with the lack of
progress over the US government shutdown, adding:
Risk aversion sees participants cashing out rather than placing more bets until a major move is made in Washington.
Updated
Europe's stock markets are sagging again today, as the US shutdown enters its eight day.
We're just nine days away from 17 October -- the date when America's national debt is expected to hit the $16.7trn limit agreed by Congress. China's warning yesterday that America needs to act swiftly to avoid a default captured plenty of attention yesterday, but didn't spark a breakthrough in Washington.
So the main indices in Europe are in the red again, with the FTSE 100 down another 22 points at 6414.
August wasn't a great month for Spain either -- industrial output
across the country was 2% lower than in August 2012, marking two full
years of contraction.
This graph shows the steady decline (the red line is the seasonally
adjusted data, while the orange line tracks the unadjusted figures): Spanish industrial production Photograph: /INE
German trade surplus rises
The latest economic data from Germany also suggests global trade isn't on fighting form, as APEC warned.
Germany's adjusted trade surplus rose to €15.6bn in August, due to a
small rise in imports - just 0.4% compared with July - while exports of
goods rose by 1% month-on-month
On a year-on-year basis, German imports were 2.2% lower than in August 2012 while exports of goods were 5.4% lower.
The data, which is seasonally adjusted, doesn't suggest a surge in
German consumption that would help weaker neighbours. It also
means German exports are still 1.1% lower than over the first eight
months of 2012.
That underlines that the global economy remains sluggish,
although Thomas Gitzel at VP Bank is optimistic for the future, saying:
Global trade remains off-colour, which is putting the brakes on German exports.
The outlook for the coming months is much more promising. Important freight indicators have risen considerably.
The Asia-Pacific leaders' warning about the global economy has been echoed by Saxo Bank this morning.
Saxo's chief economist, Steen Jakobsen, warns that
the global economy is 'running on empty'. Next year, the world must face
the consequences of the ultra-loose monetary policies that have helped
keep developed markets afloat, he argues:
2014 will see a bigger discussion on what is the real exit strategy
from the current ‘extend and pretend’. Right now the market only sees
two paths: Inflating the economy to reduce the burden of debt, or
writing off the debt between treasuries and central banks.But I believe
there is a third way:
A repeat of the 1940s - the last time Fed was this involved in
so-called helping the market. Back then, the Fed got saved by
disinflation and a recession brought on by the very same policy which
today slows the path towards recovery too much easy money. History is
about to repeat itself only because we fail to learn and to embrace the
need for change.
Photos: protests against APEC
There were protests in Bali today against leaders attending the APEC summit, led by anti-globalisation campaigners from the Indonesian People’s Alliance.
The demonstrations, which appear to be peaceful, called for the
Summit to be abandoned and claimed that trade liberalisation would
actually bring little benefit to the region: Photograph: ADEK BERRY/AFP/Getty ImagesPhotograph: ADEK BERRY/AFP/Getty ImagesIndonesian security with dogs in a buggy. Photograph: ANTONIO DASIPARU/EPA
Australia and China are still struggling to finalise a trade deal,
even after 18 rounds of talks, with the new Australian prime minister,
Tony Abbott, saying he might have to accept a watered down deal.
Reuters explains:
Negotiations have been delayed by Beijing's concerns over opening
markets to Australian food, while Australia wants China to do more to
protect intellectual property.
Updated
Asia-Pacific leaders warn growth is too weak
Malaysia's Prime Minister Najib Razak,
China's President Xi Jinping, Mexico's President Enrique Pena Nieto,
Indonesia's President Susilo Bambang Yudhoyono, and New Zealand Prime
Minister John Key during the family photo of the Asia-Pacific Economic
Cooperation (APEC) Summit in Nusa Dua, Bali, today. Photograph: MAST
IRHAM/EPAGood morning, and welcome to our rolling coverage of the
financial markets, the world economy, the eurozone and the business
world.
We start with news out of Bali, where leaders from across the Asia Pacific region have warned that economic conditions are weakening. The Asia Pacific Economic Cooperation (APEC)
issued a joint statement in which they pledged responsible
macro-economic policies, but the key point is that they're bracing for
tough conditions. World economic growth remains too subdued, they said,
with a greater risk that conditions will deteriorate rather than
improve. It's a timely warning from APEC -- the International Monetary
Fund is due to release details of its latest World Economic Outlook
later today (2pm BST).
Here's the key line from APEC's statement:
Global growth is too weak, risks remain tilted to the downside,
global trade is weakening and the economic outlook suggests growth is
likely to be slower and less balanced than desired.
The group of 21 countries, which includes Japan, China, Russia, the
United States and Australia, also pledge 'prudent and responsible'
policies to help the region, saying:
We will implement prudent and responsible macroeconomic policies to
ensure mutually reinforcing effect of growth and to maintain economic
and financial stability in the region, and prevent negative spillover
effect.
Barack Obama wasn't present to back the statement, though. The US
president remains in Washington for Day Eight of the US government
shutdown. With America's debt ceiling deadline looming, APEC leader may
have wondered if the global economy is about to get a nasty shock. With no deal in Congress, European stock markets are expected to drop again this morning. I'll be tracking all the developments through the day...copy http://www.theguardian.com
Nenhum comentário:
Postar um comentário