bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 24.07.2017 | Name days: Krista, Kristiāna, Kristiāns, Kristīne
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

Number of accidents caused by tractors and size of claims on a rise

Over the course of the past several years, the number of traffic accidents caused by specialized agricultural vehicles and the size of insurance claims has grown in Latvia, as reported by Motor Insurers' Bureau of Latvia.

Businessmen offer to help fund railway works in Estonia rejected by minister

Entrepreneurs in Lääne County, Estonia, have offered the state to help with funding the reconstruction of a railway section, by attracting private money, but the offer has been rejected by Estonian Economic Affairs Minister Kadri Simson.

International Baltic Bikini military exercises to be organized in Latvia

Baltic Bikini 2017 military exercises will be taking place in Liepaja, Latvia, throughout 24 – 28 July. More than 100 Baltic and American troops will be participating together with State Border Guard and Emergency Health Service to practice survival skills, as reported by Defence Ministry.

SRS: envelope wages will be a priority this year

More than half of Latvian employers pay their employees wages below the minimal monthly amount, said Director of the State Revenue Service Tax Control Office Sandra Karklina Admine in an interview to Rīta panorama on Monday, 24 July.

Latvians hesitant to use electronic means to request benefits

So far, Latvia residents have been rather slow in the use of electronic tools to request benefits from the State Social Insurance Agency.

Orbán promises solidarity with Poland as it approves controversial court reforms

Following the criticism Warsaw has received in mass protests and from Brussels on the approval of a controversial court reform, the Prime Minister of Hungary Viktor Orbán has pledged to defend Poland in the European Union.

New Conservative Party takes away one seat from Latvian Farmers Union in Kekava

The New Conservative Party has taken away one seat in Kekava council from Latvian Farmers Union, according to provisional data of the Central Election Commission on repeated elections in Kekava’s 785 election site.

17 journalists of Turkish newspaper charged with aiding terrorist organisation

In Turkey, 17 journalists of the opposition newspaper Cumhuriyet are to be tried over charges of aiding a terrorist organisation and, if found guilty, they face up to 43 years in jail.

Week to be warm in Latvia, but some rain is still expected

At the beginning of the week, weather in Latvia will be dictated by a small cyclone with its centre above Lithuania. The precipitation zone associated with this cyclone will bring about rain to south-east parts of Lithuania, as reported by State Environment, Geology and Meteorology Centre.

BNN summary of the week: Kucinskis in Ridzene’s room and government’s rushed decisions

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

Tourists die in Aegean Sea earthquake

A powerful quake that struck in the Aegean Sea has taken the lives of two persons in Greece, local authorities have stated.

Fashion in business: how to be heard in the modern-day world?

It would seem that nowadays strict fashion trends have «died». This is because people for ways to look beautiful and comfortable. One of the minds behind TRÉS fashion line, Enija Mugurevica shares advice how to start a business in the fashion industry from scratch and be heard and noticed in the modern-day world.

FCMC fines Norvik Banka for EUR 1.3 million and Rietumu Banka for EUR 1.56 million

Finance and Capital Market Commission in cooperation with Federal Bureau of Investigation’s Counterproliferation Center found out in a target inspection that Latvian banks – Norvik Banka and Rietumu Banka – have not followed requirements of regulations for the prevention of money laundering and terrorism funding.

Saeima approves controversial amendments to Credit Institutions Law

On Friday, 21 July, Latvian Saeima approved amendments to the Credit Institutions Law, which were previously returned to the parliament for a repeated viewing by President Raimonds Vejonis, completely unchanged.

Bank of Latvia: tax reform is a disappointment; it will not improve competitiveness

The tax reform submitted to the Saeima for approval is one big disappointment that will not improve competitiveness, said head of the Monetary Policy Office of the Bank of Latvia Uldis Rutkaste in an interview to LNT 900 seconds.

Betsafe predicts: will Duklavs remain Latvia’s Agriculture Minister?

Although Unity has asked the Union of Greens and Farmers to replace Agriculture Minister Janis Duklavs with someone else after the scandalous oligarch talks in Ridzene hotel, Duklavs will likely keep his post, according to Betsafe bookmakers. There is a 33% probability of Duklavs losing his post.

Latvian alcohol industry has an offer to increase excise tax rate

Experience shows – rapid increase of excise tax results in rapid increase of prices and rapid decline of revenue for the state treasury. Based on careful calculations, Latvian Alcohol Industry Association asks the government to stick with the current excise tax increase plan.

Air temperature to reach +24° C… +25° C in Latvia on weekend

Weather is expected to be largely dry this weekend in Latvia. Next week, however, is expected to be rainy, as reported by State Environment, Geology and Meteorology Centre.

Saeima deputies sign agreement on Oligarch talks committee’s formation

So far only parliament members have signed the agreement on the formation of a Saeima committee for the investigation of Oligarch talks. Neither of them represents Unity – Karlis Serzants from Union of Greens and Farmers and Einars Cilinskis from VL-TB/LNNK.

Seaima Praesidium approves parliamentary budget for 2018

On 20 July, Saeima Praesidium approved the parliament’s budget request for 2018. It is planned to be EUR 22.04 million, setting funding to maintain current functions on the level of 2017, BNN was informed by Saeima press-service.

Beer brewers: fooling around with tax reforms could destroy Latvia’s beer industry

By increasing excise tax for beer, the goal of reducing alcohol consumption will not be achieved. This is because consumption of other alcoholic beverages will increase as a result, notes CEO of Latvian Breweries Union Peteris Linins, commenting on the government’s plans to raise excise tax for beer.

4,558 marriages registered in Latvia in first six months of 2017

Over the past three years, Latvian birth number almost has not changed and constitutes 22 thousand annually. 10,175 children were born in the first half of 2017, which means 990 newborn fewer than in the same period a year ago.

Broadcasting organizations ask NEPLP to stop meddling with public media contents

The board of Latvian Association of Broadcasting Organizations urges the government and National Electronic Mass Media Council to continue realizing reforms in public media.

Kucinskis also met with Slesers in the infamous meeting room of Ridzene hotel

Latvian Prime Minister Maris Kucinskis admits having met with Ainars Slesers in the now infamous meeting room in Ridzene hotel a couple of times, specifically when the People’s Party made the decision to join Par labu Latviju.