bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 21.11.2017 | Name days: Andis, Zeltīte
LatviaLatvia

Expert: political turbulence creates risks of uncertainty for economy

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«Global low inflation environment is beginning to change, but slowly. Price pressure remains low because there is no stable labour pay growth. Deflation risk remains low as well because national economies of many countries are close to normal resource-usage level. Inflation expectations have increased as well,» BNN was told by SEB macroeconomics expert Dainis Gaspuitis.

He notes that the look at global economic developments has improved. Nevertheless, growing political turbulence risks raise questions about its future influence.

Gaspuitis notes that protectionism and isolationism will balance out the growth of optimism. It is clear, however, that this year will be predictably unpredictable.

«Good growth will continue in USA, but not because of Trump’s policy. Growing economies in the meanwhile has reached the lowest growth point. The EU and UK have entered a point of political and economic intersection. For the UK, this intersection is the Brexit process. The EU, on the other hand, faces a number of other challenges,» Gaspuitis comments.

The expert says that in spite of many internal and geopolitical complications, economic signals remain positive for the most part. GDP outlooks for the next two years have become somewhat more positive.

«GDP indexes of OECD countries will reach 2.1% in the next couple of years. Mood indexes, which have close synergy on a global level, are on the highest level since 2011,» Gaspuitis adds.

The economist notes that this partially reflects large hopes for fiscal stimuli and political change in energy and finance sectors. Positive tendencies are also noted in relation to the improvement of the perspective for growing economies, which comes from price rise of raw materials and more powerful capital cost cycle, Gaspuitis explains.

«In many fields (economics, trade, foreign policy and security) USA has begun reviewing their current policy. There is still a lack of information for possible changes and specific actions. This increases market insecurity. The goal of Trump’s policy is to strengthen USA’s corporate sector, which will be achieved through tax reform. To create an internal devaluation effect and enhance capital repatriation from abroad,» Gaspuitis says.

He notes that clean fiscal influence could be 0.2% from GDP this year and 0.3% next year, because USA’s economy is already close to full resource usage level. GDP growth in the next two years is predicted at 2.6%.

«Inflation-reducing forces remain, although tariff growth and other obstacles in the global trade system can still increase price pressure. In spite of cautious steps, many countries might gradually refuse non-traditional monetary policy. US monetary policy makers face many dilemmas. For example, the American fiscal policy risk may become pro-cyclic, which may increase inflation pressure,» explains the economist.

Gaspuitis predicts that the Federal Reserve System will increase interest rates twice this year and three times next year. He says it will help other central banks commence the conclusion of stimulating monetary policies. ‘Although the European Central Bank intends to keep the rate at 0.0% this year, it is likely the bank will gradually halt its securities procurement programmes.’

«Europe’s economy ignores the growing political uncertainty and demonstrates activation of employment and investments. Meanwhile, other countries increase their pressure on Germany to force it to realize a more expansive fiscal policy, so that it would help reduce risks of imbalance,» – explains Gaspuitis.

He notes that it is expected that the upcoming elections in Netherlands, France, Germany and maybe Italy will increase opposition against current governments. The largest risk is associated with the outcome of elections in France. Results could potentially shake up political and economic stability in Eurozone. Eurozone’s GDP growth will reach 1.8% this year and 1.9% next year.

The proportion of rapidly growing economies in the world is made up of nearly 60% of the world’s economy. «They are able to show good results in conditions of growing trade development risks, denominated debt burden in US dollar and in the process of resolving internal political challenges,» the economist told BNN.

He notes that overall GDP growth of this group of countries will speed up to 4.6% this year and 4.8% next year. «It will mainly consist of growth in China and India and economic recovery in Brazil. Upcoming political changes in the second half of the year will create the situation when Beijing will be more cautious in the realization of new reforms,» Gaspuitis reports.

Ref: 224.109.109.1441


Leave a reply

European Parliament triggers punitive procedure against Poland

Members of the European Parliament have passed a resolution requesting for the application of the so-called «nuclear option» for Poland, Article 7 of the EU Treaty, because of the threat to the rule of law in the biggest Eastern European country.

BNN summary of the week: medicinal cannabis in Lithuania, cargo anti-record, and Lemberg’s dwindling influence in UGF

BNN offers a summary of this week’s topical news in a variety of categories: Fight; Growth; Truth; Future and Opinion.

NAF: Russia’s attitude remains unfriendly towards Latvia

So far Russia’s demonstrated attitude has remained unfriendly towards Latvia, said Commander of Latvian Armed Forces Leonīds Kalniņš in an interview to LNT.

Lembergs’ turn to testify before parliamentary committee has come

Aivars Lembergs, who is accused of serious crimes and is suspended from performing duties as chairman of Ventspils City Council, has been invited to come to a meeting of the Saeima’s Investigative Committee and answer questions associated with so-called oligarchs case.

How Latvian communities around the world plan to celebrate Latvia’s birthday?

«Celebration of independence of the Republic of Latvia is an important tradition that allows members of Latvia’s diaspora to maintain ties with their homeland – this year’s event will be even more expansive and inclusive than ever before. This is because events associated with the country’s hundredth birthday will be organized all around the world,» says manager of World Federation of Free Latvians office in Latvia Jānis Andersons.

European Parliament triggers punitive procedure against Poland

Members of the European Parliament have passed a resolution requesting for the application of the so-called «nuclear option» for Poland, Article 7 of the EU Treaty, because of the threat to the rule of law in the biggest Eastern European country.

Wage rules violations most often associated with envelope wages

To promote public awareness and improve commercial environment, honest competition and honest compliance with taxes, Latvia’s State Revenue Service intends to expand its database with new information about taxpayers, BNN was told by SRS.

Management of Unity’s Saeima faction to change in December

«Political consultations with all of Unity’s partner parties that are represented in the Saeima’s faction have concluded. An agreement has been reached to perform management change before the end of Saeima’s autumn session – around 21 December,» says Unity’s chairman Arvils Ašeradens.

EP prepared to commence talks with EU governments on reforming asylum system

The European Parliament is prepared to commence talks about reforming Dublin Regulation to ensure every member state is able to resettle a portion of asylum seekers.

Estonia to pour into Finnish-Estonian cultural fund 700 000 euros

Estonian cabinet of ministers has decided to attribute 700,000 euros to the Finno-Estonian Cultural Fund, an organisation working since 2015 aimed at fostering cooperation between the two states in culture, creative economy and training both for individuals and organizations.

Russia in UN vetoes extension of Syrian chemical attack investigation

At the UN Security Council, Russia has used its veto powers to block a resolution with which it would be allowed to continue the international investigation into a chemical attack this spring in Syria, which prompted the U.S. to launch missile strikes on a Syrian airbase.

Latvia’s birthday expected to be windy

A precipitation zone will reach Latvia from the west on Friday, 17 November. The precipitation zone will, however, pass over Latvia quickly, making rainfall short and periods of clear sky more frequent and longer. Air temperature is expected to stay within +5° C… +8° C, as reported by State Environment, Geology and Meteorology Centre.

State of emergency in force in flood-hit Greece

Rescue services in Greece are looking for no less than five people, who have gone missing following unexpected and disastrous floods on Wednesday, November 15, that killed 15 people; however, bad weather is still expected.

Laupīšanas 101 director: Latvia’s film industry has yet to reach its potential height

There is sufficient evidence to prove that Latvia’s film industry is capable, but at the same time many films are directed basically the same way. There is a lack of creativity, which means very slow development for the industry, said Kaspars Marhlevičs, director of short comedy Laupīšanas 101, in an interview to BNN.

Medical cannabis bill paves way in Lithuanian legislature

Otherwise conservative Lithuania has made a big stride forward legalising cannabis for medical use with 92 Lithuanian parliamentarians voting Thursday, November 15, to open the bill draft on medication containing cannabis. The law draft should go back to the parliamentary floor for deliberations on December 12.

Latvian sentenced to ten years in prison for fighting on the side of ISIS in Syria

On Thursday, 16 November, Latvian citizen Mārtiņš Grīnbergs was sentenced by Riga Regional Court to ten years and three months in prison for fighting on the side of Islamic State terrorist organization.

European Parliament: Africa’s development requires a new stimulus

To resolve economic, social and migration-related problems, which usually accompany lasting crises, better African-EU cooperation is needed, European Parliament members say.

Latvian Chamber for Commerce and Industry proposes preventing new MPC reforms

Increase of mandatory procurement components cannot be allowed. Exactly the opposite – this cost should be dropped entirely for end electricity prices in an attempt to improve international competitiveness of companies, BNN was told by council members of Latvian Chamber for Commerce and Industry.

Matīss: LDz cannot raise tariffs and perform rail electrification under cargo anti-record

Because Latvijas dzelzceļš has set an anti-record in cargo transports in the first ten months of this year, Saeima deputy and member of the National Economy Committee Anrijs Matīss says raising the fee for the use of infrastructure cannot be allowed. He adds that the intended railway electrification project should be considered very carefully.

Lithuania and Latvia placed in top 10 in climate policy index

In the annual Climate Change Performance Index, where climate policy action in 57 countries has been evaluated, on a scale from «very high» to «very low», 11 EU member states have been evaluated with as having been highly active, with Sweden showing the best results ahead of Lithuania, the UK, Finland and Latvia.

Bite Latvija buys Stream Networks and Latnet

Mobile commutations operator Bite Latvija has signed a purchase agreement for 100% of shares of Stream Networks and its subsidiary Latner Serviss, as BNN was informed by Bite manager in Latvia Kaspars Buls.

airBaltic carried three million passengers in first ten months of 2017

In the first ten months of 2017, airBaltic carried a total of 3,007,034 passengers to destinations in Europe, Scandinavia, Russia, CIS and the Middle East, BNN was told by the company.

Kaljulaid sees African opportunities to outplace EU in digitalisation

During a visit to Ethiopia, Estonian President Kersti Kaljulaid has discussed African-EU relations with the African Commissioner for Trade and Industry and recommended investing into digital development that would be beneficial for the continent itself.

Most employed people in Latvia are satisfied with their jobs

More and more often employers experience lack of qualified labour force, as well as increase of employees’ confidence about their competitiveness on the labour market and their openness for better job offers.

Estonian railways operator happy about increasing freight volume

Freight carried on the infrastructure of the Estonian state railway company Estonian Railways in October amounted to one million tons, which is a 10.4% hike compared to October 2016.