bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 27.07.2017 | Name days: Marta, Dita

SEB: Russia’s economy will continue to decline this year as well

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe global economy has the potential to become stronger. This growth, however, will be unbalanced and brittle. Risks of recession remain dominant in spite of lasting expansive monetary policy and significantly reduced energy prices, notes SEB Bank economist Dainis Gaspuitis.

According to him, the global economy now faces massive and complicated challenges. With the decline of raw materials and rapidly growing debt burden of countries dependent on oil prices, and the currently recession, structural weaknesses of the world’s economies are becoming apparent. China and other oil giants will be forced to sell their assets, which will exact more pressure on global stock markets. In addition to that, the US Federal Reserve System’s corrections and China’s currency policy will exact even more pressure. So far China’s transition to a more flexible currency rate police has not been evident of the country’s desire to become involved in currency exchange wars. The process of normalisation of the currency police will not be an easy one, because it requires a larger degree of cooperation between central banks and other organisations.

China’s GDP growth in 2016 is expected to be 6.5% (6.9% in 2015). It is also expected to decline to 6% in 2017. China will avoid a hard fall thanks to future monetary and fiscal stimulating measures and growing service sector. The slow-down is not structural. It is expected to be cyclic. Industrial sector’s overcapacity, debt burden’s increase and problems with state owned companies make the economy very vulnerable, the expert says.

«Russia and Brazil are showing serious growth problems. Economies of the two countries will continue to decline this year as well. India’s economy is showing the opposite tendency – its GDP will grow up to 8% in 2017. Rapidly growing economies currently form approximately 60% of the GDP, whereas it formed upwards of 80% of the global GDP in previous years. Now these countries are a slowing factor for the global economy, as well as a large asymmetric risk factor, considering political risk elements.»

The European Union’s economy continues to gradually recover. Eurozone benefits from low interest rates, oil price decline and weak euro. Consumption-driven growth was enhanced by low inflation, which helps with households’ purchasing power in conditions of reducing unemployment. Experts also expect a very cautious growth of capital expenditure. According to outlooks, Eurozone’s GDP is expected to be 1.9% this year (1.5% in 2015) and 2% in 2017. The impact of the migrant crisis on economy is not significant. Nevertheless, there are risks of uncertainty in regards to long-term impact on economy. The European Union has many challenges ahead, especially considering the risk of UK exiting the union.

«Economy in USA has been impacted by international events in spite of positive tendencies in the country itself. The end of 2015 was largely unimpressive. USA’s GDP growth for 2016 is expected to be similar to last year’s – 2.4%. Next year’s economic growth may reach 2.7%. Powers non-beneficial to inflation continue dominating the global market – overproduction, pressure on wages and globalisation and digitisation processes. For most countries inflation growth has been slowed because of the drop of oil prices. Growing production pressure will help reduce the risk of deflation. Unemployment is low in USA to point of kickback appearing in wage changes, especially in 2017. Looking at the future, it is possible inflation will grow. Nevertheless, it is expected to be below most countries’ acceptable threshold,» – explains Gaspuitis.

«Global monetary policy will become even more expansive this year. Weak risk appetite on financial markets seemingly provokes new stimulating measures. Although the US Central Bank continues to raise interest rates, the normalisation process is delayed by the fact that the rest of the world is headed in the opposite direction. Extremely low inflation expectations and negative growth risks force the European Central Bank and the Central Bank of Japan to reduce base rates and expand asset procurements. Considering the risk that actual interest rates have a tendency of growing under influence of dropping inflation, many central banks will find it difficult to conclude their stimulating efforts. Everything points to the growth of future rates being cautious. The long low inflation period will have forced central banks to reassess their monetary policy goals. It is possible that central banks will be forced to admit that more time will be necessary than two years to achieve the established inflation goals,» – said the economist.

Ref: 102.109.109.7826


Leave a reply

Farmers Saeima: beef industry in Latvia is not sufficiently developed

Farmers Saeima believes Latvia’s beef industry is not sufficiently developed, and existing farms have not sufficiently stabilized – many farms have major debt. Because of that any kind of support for the industry is welcome.

Puce: Latvia should ratify Istanbul Convention without reservations

For Latvia’s Development political party has turned to Welfare Ministry with a request to ratify Istanbul Convention without any corrections as soon as possible, BNN was informed by the party’s representatives.

More than half of Latvian businessmen work on weekend; study shows

Businessmen normally spend eight hours and five minutes on work every day. More than 58% of Latvian businessmen also work on weekends, according to data from the latest Citadele Index study.

Farmers: crop yield this year will be positive thanks to weather

In Zemgale, crop harvest began a week ago. Harvest of winter crops is almost over. Harvests elsewhere in Latvia will commence no sooner than August, farmers say.

Murniece offers UGF to consider replacing Duklavs

«The policy is that, considering Duklavs’ involvement in Ridzene talks, the Union of Greens and Farmers should consider ways of resolving the situation,» says Saeima speaker Inara Murniece.

Chinese-Russian navy drill takes place in Baltic Sea

Russian and Chinese navies have launched their first joint military drill in the Baltic Sea raising concern to NATO member states Estonia, Latvia, Lithuania and Poland, cautious of Russia's aggressive actions in Ukraine.

Tax loss forecast by Estonian food producers dismissed by Finance Minister

Estonian Finance Minister Toomas Tõniste has rejected the grim forecast published by the Estonian Food Industry Association this week that the state budget would lose 170 million euros in tax revenue in 2018 due to excise tax hikes.

Antane: excise tax for diesel fuel should be reduced, not increased

«Unfortunately, when making the decision to increase excise tax rate for diesel fuel, the government did not consider all possible risks this decision could bring to the transport and logistics industry and the country’s economy as a whole,» BNN was told by President of Baltic Association – Transport and Logistics Inga Antane.

Association: rapid increase of excise tax would cause dramatic rise of smuggling activity

National Association for Tobacco Product Manufacturers is confused about Finance Ministry’s submitted proposals for tax reform that provide for raising excise tax on cigarettes by 11% instead of previously planned 5.5%.

UK plans to ban petrol and diesel vehicles

In an attempt to curb air pollution the UK plans to set the goal to ban from 2040 new diesel and petrol engine cars and vans.

Members of Saeima delegated to the investigative committee in charge of Oligarch case

Andrejs Judins from Unity, Martins Sics from Latvian Association of Regions, Igors Pimetovs from Harmnony, Ritvars Jansons from VL-TB/LNNK, Inguna Sudraba from To Latvia from the Heart and Ainars Mezulis from the Union of Greens and Farmers have been delegated to the parliamentary committee for the investigation of Oligarch case.

U.S. legislators back additional sanctions on Russia

The House of Representatives of the U.S. Congress has adopted imposing additional sanctions on Russia, North Korea and Iran, even though U.S. President Donald Trump has opposed fresh sanctions on Russia.

Government allows Bite Lietuva to become the owner of TV3, LNT and Star FM

On Tuesday, 25 July, the Cabinet of Ministers permitted Lithuanian company UAB BITE Lietuva to acquire decisive influence in Latvian media companies TV 3 Latvia, LNT and Star FM.

Latvia put on 34th place in global pension index

Latvia is on the 34th place of Natixis Global Asset Management global pension index. It is two places lower than last year, according to the index report for 2017.

Experts predict nearly half of beer consumed in Estonia will be procured in Latvia

Estimates of Estonian alcohol producers and retail traders show that nearly half of all beer and one-third of vodka that will be consumed in the country next year will be procured in Latvia. According to experts, this way Estonia will lose up to EUR 170 million in tax revenue, Postimees reports.

Latvia had the sixth smallest new vehicles registration index in Europe

Compared with the same period of 2016, Latvia has had the sixth lowest registration index for new commercial vehicles in Europe in January-June period, according to data published by European Automobile Manufacturers Association.

LAR proposes reducing micro-enterprise tax to 12%

Latvian Association of Regions proposes establishing micro-enterprise tax rate at 12% instead of 15%, as well as state that calendar year turnover for micro-enterprises is not to be reduced to EUR 40,000, as it is proposed by the government, but to be kept at the current restriction – under EUR 100,000.

Court dismisses Krums from the last of his supervised insolvency process

On Monday, 24 July, Riga Pardaugava Court dismissed the currently arrested insolvency administrator Ilmars Krums from the last one of the insolvency processes currently under his supervision, as confirmed by Insolvency Administration’s representative.

49 «quota refugees» away from Estonia for over 90 days

49 people of the refugees accepted by Estonia as part of the European Union's refugee relocation programme have exceeded the 90-day period of being allowed be away from the country.

Opinion: EU agricultural policy is not equal to all member states

Latvian Association of Agricultural Cooperatives organized a meeting with Agriculture Ministry’s and State Plant Protection Service’s specialists to discuss and search for solutions for opportunities to sow fermented summer rapeseed.

In pictures: Corsica hit by widespread forest fires

Fire-fighters in the French Mediterranean island of Corsica continued on the night to July 25 to battle forest fires covering an area of some 900 hectares.

Can Latvia expect a more rapid rise of excise tax for alcohol and cigarettes?

Finance Ministry has plans to raise excise tax on alcoholic beverages and cigarettes even more rapidly, according to proposals prepared by the ministry to the Excise Tax Law. These proposals have been submitted to the Saeima for approval in the final reading.

LCCI: e-health system will help reduce the number of dishonest patients

«Healthcare Ministry has to secure full integration of e-health system and form a policy for healthcare specialists that is aimed at returning labourers back to work as soon as possible, not issuing countless sick leave certificates,» as noted by representatives of Latvian Chamber for Commerce and Industry.

Swedish government admits «disastrous» data leak

The government of Sweden has stated that one of its agencies has committed a massive leak of sensitive data in 2015, when it organised an information technology outsourcing procedure.

Vucans: there are plenty of proposals for tax reform laws

Around 350 proposals have been received by the Latvian parliament in relation to tax reform laws. Last week, the Saeima supported tax reform laws in the first reading. This week, on the other hand, it is planned to review them in the final reading.