bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 21.01.2018 | Name days: Agne, Agnese, Agnija

Economist: this year’s global economic growth will remain weak

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«In parallel to reduction of growth predictions, certain risk factors have lost their strength since the beginning of the year. For example, oil prices and the stock market have recovered since the previous decline. Central banks have either become more stimulating or have put off the normalization of their policy,» – comments SEB Bank macroeconomic expert Dainis Gaspuitis.

According to him, concerns about China have reduced slightly as well. Nevertheless, global economic growth will remain anaemic and weak. GDP growth in 35 OECD member states will likely reach 1.9%, which is lower in comparison with last year (2.1%). GDP growth may reach 2.3% in 2017. Downward pointing risks dominate the near future perspective even though they have somewhat reduced. Political risks in USA (presidential elections) and the European Union (Brexit and Greek debt), as well as elections in Spain, France and Germany, China’s economic situation, global debt level, as well as limited economic policy manoeuvring options are factors that create serious concerns in the long-term perspective.

«Lengthy stagnation, which provides for slow growth, low interest rates and inflation, is becoming more expressed. The leaning towards savings and investments is becoming more expressed in the world, which puts pressure on actual interest rates. The interest rate situation is more likely to adapt to the situation, rather than create it. The role of fiscal policy will likely grow, because the potential of monetary policy tools continues to deplete and the effect continues to become weaker. The question is whether or not political leaders will be able to take the initiative. Market economy’s dependence on political decisions has increased over the years of lasting financial and economic deregulation. The influence of central banks on loan accessibility has sharply increased, which means clear risks for ineffective division of resources. The established monetary policy has only contributed to the increase of inequality. The negative interest rate policy is taking on a political dimension because it is being interpreted as a secret welfare tax. Borders between central banks and politics have become more conditional, which raises the question about the independence of central banks,» – explains Gaspuitis.

Japan, Germany, the United Kingdom and Sweden to some extent are countries whose restrictions on the labour market have not been beneficial for wage rise lately. Politicians and central banks of many countries have announced that it would best to secure a more rapid increase of wages. Minimum wage rise in USA and the UK, for example, is a sign of loss of trust in the market’s ability to create balance. Looking ahead, it should be said that there are still signs that the US labour market could soon begin increasing wages more actively. Inflation is expected to remain low because of the growing competition between globalization and digitization processes and forming surplus of production output. The price of Brent crude oil could rise to USD 45-50 within the next two years, which will help reduce deflation risks. Inflation has not gone anywhere. It remains hard for central banks to reach their inflation goals. In spite of concerns about the effectiveness of the monetary policy, multiple central banks will continue their stimulating programmes. Due to the expressed low inflation in Eurozone and Japan, the European Central Bank maintains the possibility of expanding asset procurement volumes. Japan’s Central Bank retains the possibility of reducing its main interest rate from the current -0.10% to -0.30%, the expert says.

«The slowdown of China’s growth remains within the acceptable range, allowing the country to avoid a rough landing. Beijing’s use of fiscal and monetary policy softens production output and housing surplus, as well as the negative influence of state and private companies’ debt level. China’s domestic economy has a good potential of becoming the main economic engine in the future. GDP growth is expected to reach 6.5% in 2016 and 6.3% in 2017. Economic development in other BRIC countries will be varied. Although India will grow by 7.5%, Russia and Brazil will remain in recession due to structural problems, low oil price and political problems. Decline of USA’s economic growth does not reflect any fundamental difficulties. Households can expect further improvements of the economic situation related to the labour market, income and welfare. In addition to slightly higher oil prices, the situation will stabilize somewhat in industry. Economic growth will recover in the second half of the year. With that, USA’s growth will reach only 1.9% in 2016 and 2.5% in 2017,» – adds the economist.

«Eurozone’s economic accomplishment has been relatively stable as of late. In 2016, Eurozone’s economy returned to the GDP level that was noted before the Lehman Brothers collapse in 2008. Eurozone has the potential to grow above its potential, which is 1%. As a result, Eurozone’s GDP will grow 1.7% in 2016 and 1.8% in 2017. But Eurozone is a monetary union with imbalanced growth and major problems of political nature. Germany is facing growing criticisms from the International Monetary Fund, USA and even other Eurozone member states for its surplus of EUR 290 billion (8% of GDP) and too cautious economic policy. The banking sector, especially in South Europe, is pressured with excessive debt level, unsafe loans and low interest rates. All this delays growth. Populism is on a rise in multiple countries, which only increases tension,» – said Gaspuitis.

Estonia’s, Latvia’s and Lithuania’s perspectives are good. Nevertheless, risks remain. Private consumption is an important factor for economic growth. It only benefits from a powerful labour market. The expected wage rise will provide higher purchasing power to households. Unfortunately, wage rise also threatens competitiveness. Inflation will remain low. Finances of the public sector remain balanced, which provides governments a degree of freedom for situations of economic decline. GDP growth in Latvia is expected to be 2.7% in 2016 and 3.5% in 2017. Lithuania and Estonia are expected to grow 2.8% and 2% this year and 3.2% and 2.4% the next, according to the bank’s expert.

Ref: 102.109.109.7952


Leave a reply

Week in Lithuania. Fake news on Lithuanian Defence Minister planted on news portal

The Tv3. lt news website was hacked on Thursday, January 18 - a fake news story about Lithuanian Defence Minister Raimundas Karoblis was posted claiming that Karoblis allegedly harassed Ridas Jasiulionis, a journalist at the Žinių Radijas radio station, and admitted being gay.

BNN summary of the week: final report on Oligarchs case and ordered attacks on e-health

BNN offers a summary of this week’s topical news in a variety of categories: Change; Fight; Attack; Growth; Decline; Opinion; and Study.

Economist: the most important reform has to happen in people’s heads

«Of all the clever things taught to us in school about psychology, one thing that has stuck with me over the years is the idea of internal/external control point. There are people who believe they make their own fate. There are also people who believe our fate depends on external powers. I suspect people in Latvia explain successes and failures with external factors much more than people in Switzerland or any other country that has enjoyed its freedom longer than Latvia,» comments Luminor Bank’s economist Pēteris Strautiņš.

Minister promises bigger wages for working people and support for country’s industry

«Latvian Economy Ministry’s priorities for 2018 include increasing wages for working people and providing support to the country’s industry. For Latvia’s centenary year, every resident should have the right to experience the increase of the personal and state welfare,» promises Economy Minister Arvils Ašeradens.

Latvenergo: electricity price has declined 30% in the past three years

Average electricity price in Latvia has declined in recent years. The average price of electricity has declined by 30% at Nord Pool exchange between 2014 and 2017, allowing end user costs to decline, says Latvenergo.

Alcohol sellers in Estonia to be checked by little «police»

To find shop assistants illegally selling alcohol or tobacco to minors, Estonian police introduces the method of sending minors as police aides to retail shops to try to purchase the products banned to them.

EY study: cyber security has become a priority to banks this year

Over the course of the year, priorities of banks around the world have switched from reputation and risk management to data security matters, as concluded in the latest EY Global Banking Outlook 2018.

Political association: UGF and Harmony are covering up state capture

«Parliamentary investigation of Oligarchs case has shown what is what in the Saeima of the Republic of Latvia. Green farmers are in full harmony, covering up Aivars Lembergs and the fact of state capture. They and Inguna Sudraba have made the parliamentary investigation into a farce. Unfortunately, the power in those people’s hands is no farce – rather misfortune for all of Latvia. I hope citizens will take all that into account when they go voting,» says leader of Kustība Par! Daniels Pavļuts.

Tallinn-Helsinki tunnel plan lacks ambition, says «Angry Birds» game maker

While Finland and Estonia work on plans of an under-sea tunnel from Tallinn to Helsinki, the construction of which could start in the 2030s, a Finnish businessman, previously involved in development of Angy Birds video game, has presented plans to finish the massive construction project in 2024 already.

Experts: healthcare financing law will deny healthcare to the least protected

In a discussion regarding healthcare, experts said that Latvian President Raimonds Vējoņis’ proposed Healthcare Financing Law is economically unjustified and ineffective. The document lacks principles of a socially responsible state, because healthcare is becoming less accessible, which will likely worsen public health indexes, says Kustība Par! political party.

Branded «aggressor state», Russia says Ukraine buries Minsk peace agreements

As the Donbas War continues, the parliament of Ukraine has passed the so-called Donbas reintegration bill after three days of debates defining territories controlled by pro-Russian separatists in the east of the country as temporarily occupied by Russia.

Weather to remain winter-like in Latvia during the weekend and next week

On Friday and Saturday, no major increase of snow is expected. Air temperature will increase slightly, but colder masses of air will slow into the country on Sunday, as reported by Latvian State Environment, Geology and Meteorology Centre.

Winter storm in Netherlands and Germany turns tragic

A powerful winter storm in western and central Europe has claimed the lives of eight people.

Lithuanian bishops: skipping fasting on February 16 this year is not a sin

In an unprecedented move, the Conference of Lithuanian Bishops, the governing body of the Lithuanian Catholic Church, said that meat dishes okay for the people of faith on February 16, which marks the 100-year anniversary of Lithuania's statehood and the Lent Friday, which is traditionally a day of fasting for religious Catholic people.

Coincidence? Votes from Harmony and UGF ensure Sudraba remains the head of Oligarchs case committee

On Thursday, 18 January, the majority of Saeima members voted against the proposal to dismiss Inguna Sudraba from the post of the head of parliamentary investigative committee in charge of the review of the infamous Oligarchs case.

Kaljulaid criticised over involvement of acclaimed, but unrestrained director in centennial reception

As Estonia readies for the presidential reception to honour the 100th anniversary of Estonia, its President Kersti Kaljulaid is being criticised in an open letter for trusting Tallinn’s NO99 theatre, whose director physically assaulted a female colleague.

22.1% of Latvia’s residents subjected to risk of poverty

In 2017, 425 thousand persons or 22.1 % of Latvia population were at risk of poverty in 2016 – 0.3 percentage points less than in 2015. Equivalent income of this part of the population were below 330 euros monthly.

LAAC: Latvia’s milk market can be sorted out by joining forces in exports

Latvian Association of Agricultural Cooperatives (LAAC) has received support and praise for the public discussion regarding rapid milk procurement price changes, which is something that has recently affected the majority of agricultural cooperatives. This has helped cooperatives band together in order to sort out the milk market. This idea came from the example set by grain producer cooperatives, which did the same thing fifteen years ago, as reported by the association’s representatives.

Forevers announces its decision to exit from Latvian Federation of Food Companies

Forevers meat processing company has decided to exit from Latvian Federation of Food Companies (LFFC). The contract between two parties will be terminated in January.

Saeima’s Oligarchs case investigative committee hastily approves final report

In spite of objections, grammatical errors, criticisms about lacking effort, as well as Inguna Sudraba’s unfit status to lead the committee, members decided to move the meeting from 11:00 to 08:00 and approve the final report in a rushed vote.

Removal of 1 and 2 euro cent coins from circulation suggested by Bank of Estonia

Estonian central bank is willing to follow the eurozone trend of limiting the circulation of euro 1-cent and 2-cent coins and in time to remove them entirely from circulation in the Baltic country.

Cert.lv: attacks on e-health system and LETA were likely ordered

Attacks on e-health system and LETA agency were likely ordered, said Cert.lv deputy manager Varis Teivāns in an interview to Rīta Panorāma programme of LTV.

As Catalan parliament reconvenes, it elects pro-independence speaker

The Catalan regional parliament has in its first sitting since its ousting and snap December election elected a separatist-minded politician as its Chairman, which indicates that the attempts to break the region away from Spain would continue.

Latvia’s National Armed forces receive new Harris tactical radio equipment

In 2017, Latvia received tactical military radios worth USD 10.5 million from American Harris Corporation. Procurement of radio equipment will further improve command function and help develop a lasting communication system with other NATO member states, as reported by Latvian Defence Ministry.

MEP: Europe continues strengthening its energy independence

«The European Parliament has voiced strong support towards Europe’s energy independence and moving its energy policy away from Russia’s monopoly by investing in energy efficiency and renewable energy resources,» said MEP Krišjānis Kariņš after the vote on Clean Energy Act’s first reading in Strasbourg.

Would you be ready to boycott something in your life?

View Results

Loading ... Loading ...

Polls Archive



Category feed: Feed: