Russia: calls for lower rates go unheeded…for now

Posted on May 16, 2012 by Stephen Rocks

A Russian proverb states ‘when money talks, truth shuts up’; reason, then, to be wary of the recent complaints of Oleg Deripraska. The billionaire industrialist has been wading into the debate over monetary policy in Russia, calling for the central bank to lower interest rates and condemning the current management team as “ridiculous”. But Mr Deripraska is not without a case: he points to the difference between lending rates, at around 9%, and the current low level of inflation, at a post-Soviet low of 3.6% in April. This implies a rather hefty real interest rate of 5.3% (Chart), which he argues is holding back investment in the economy and slowing growth. Continue reading →

Posted in Inflation, Investment, Russia | Leave a comment

What are the odds of Brazil’s industrial output reaching market expectations?

Posted on May 15, 2012 by Carlos Pallordet

Market expectations for Brazil’s industrial production in 2012 continue to be overly optimistic. In order to achieve the annual growth the market expects (1,92% according to the latest central bank’s survey), the average monthly growth rate for the remainder of the year has to be extraordinarily high (we estimated it at 1.1%).
Continue reading →

Posted in Brazil, Economics, Industrial Production, Statistics | Leave a comment

Brazilian government growth forecast reflects wishful thinking

Posted on May 14, 2012 by Mary Stokes

The Ministry of Finance projects the Brazilian economy will grow by 4.5% this year. The trouble with this forecast is that it increasingly looks out of touch with reality. By way of comparison, the central bank foresees growth of 3.5%, which is broadly in line with the 3.4% forecast by the World Bank and the 3.2% forecast by the market consensus and by Timetric.

Instead of excessive optimism on the part of the government, perhaps the other forecasts are overly downbeat? This is certainly a possibility, but the facts on the ground suggest otherwise.

Continue reading →

Posted in Brazil, Budget, GDP | Tagged , , | Leave a comment

India’s policy troubles

Posted on May 10, 2012 by Danny Richards

Foreign investors in India have had few reasons to cheer in the recent past given the slowing economy, corruption scandals, and general government ineffectiveness. However, there was momentary joy last week, when the government announced that it had decided to postpone the implementation of a deeply unpopular new policy, the General Anti-Avoidance Rule (GAAR), which gives the tax authorities the powers to investigate deals involving foreign firms that are believed to have been structured solely in a way to avoid tax. However, investors continue to face an uncertain future in terms of their tax obligations.

Continue reading →

Posted in Economics, India, Investment, Statistics | Leave a comment

Oil Spill: UK mining continues to fall

Posted on May 4, 2012 by Lauren Buljubasic

Mining and quarrying might not be much more than 2% of UK GDP but it’s falling fast – really fast – and last year alone accounted for about 0.3 percentage points off growth. In current times, this is significant. The output of this sector, which is mostly North Sea oil extraction, is very volatile from quarter to quarter but has been on a decade-long decline with unpleasant consequences for the growth figures. It looks set to be a drag on economic growth for a while to come.  Continue reading →

Posted in Economics, GDP, Industrial Production, UK | Leave a comment