AuthorTopic: IMF Much Gloomier About the Global Economy  (Read 1001 times)

Offline g

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IMF Much Gloomier About the Global Economy
« on: October 09, 2012, 08:40:21 AM »
IMF much gloomier about the global economy                  :icon_study:

Posted By Kiron Sarkar On October 9, 2012 @ 10:25 am In Bailouts,Think Tank | No Comments

The Governor of the PBoC, states that the Chinese economy is facing a “relatively big downward pressure” and that the PBoC is to take more preemptive and targeted measures in respect of monetary policy. The Shanghai Composite closed +2.0% higher today;

The IMF has reduced its growth forecast for China to +7.8% for the current year, from +8.0% previously, rising to +8.2%, from +8.4% previously in 2013 – still too optimistic;

The PBoC injected Yuan 265bn (US$42bn) into the money markets today to reduce lending rates. However, it looks as if liquidity needs will persist – need to check out.

Copper consumption is set to fall this year, the 1st time since 2008, though are expected to increase modestly next. Rio came out with very cautious comments on China today;

The Chinese have been “investing” and offering aid to African countries for some time. However, the “aid” comes with certain attached strings. In addition, the Chinese are also exporting their people to the continent. A number of Africans resent the “invasion” by the Chinese. Bloomberg reports on a conflict involving illegal gold mining by Chinese nationals ,who are armed, in Ghana. These kind of conflicts will escalate. To date, the Chinese have been supported by the regimes in many African countries, who have, lets say “benefited” from their presence. Times change though;

J P Morgan forecast that Japanese GDP this Q could decline by -0.8%, much lower than the zero growth previously forecast. Japanese GDP is expected to have expanded by +0.2% in the 3rd Q this year. The sharp decline in exports to China, which is Japan’s largest export market, due to tensions over territorial claims to islands in the South China seas, is the main reason cited for the decline in exports;

The Japanese September service sector sentiment index fell to 41.2, from 43.6 in August.

Japan’s current account surplus increased in August, the 1st time in 18 months, though will be temporary – the clear trend is for the surplus to decline. Japanese exports fell -5.8% in August Y/Y, the 3rd consecutive monthly decline, with exports to China lower by -9.9% ;

It looks as if the series of economic reforms proposed by the invigorated Indian PM, but most likely, by the newly appointed Finance Minister, may have a reasonable chance of being voted through, due to a divided opposition. It’s still up in the air, especially nationwide implementation of the multi brand foreign retailer initiative, but the ruling coalition does have a sporting chance. In normal circumstances, bureaucracy, corruption and other familiar problems would have stifled the reform proposals to death, but this time around, maybe, just maybe…….in any event, the administration needs to do something ahead of the national elections to be held in May 2014 at the latest;

The IMF forecasts that Indian GDP will decline to a decade low +4.9% this year, well below the +6.1% forecast previously. It forecast that GDP will rise to +6.0% next year. The fiscal deficit needs to be tackled. They urged investment into infrastructure – very much needed

Labour unrest in the mining industry is likely to spread across other sectors in South Africa. The country, for the moment, is witnessing strong capital inflows as a result in government bonds being included in the World Government Bond Index earlier this year. Credit Suisse estimates that some US$7bn to US$9bn will flow into the country, roughly half of which has already been invested. Once the re balancing is completed (expected to be relatively soon), pressure on the Rand could well increase. The ANC faces a leadership election in December, adding to the uncertainty. The youth wing of the ANC has called for

http://www.ritholtz.com/blog/2012/10/imf-much-gloomier-about-the-global-economy/     

Offline monsta666

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Re: IMF Much Gloomier About the Global Economy
« Reply #1 on: October 09, 2012, 12:48:21 PM »
The economic forecast by the IMF may seem gloomy when compared to other mainstream sources but I do wonder how these predictions of growth will shape up when we look at them in 12 months time. Methinks they will appear rather optimistic like last years (2011) projections for 2012. Whenever you see these economic projections it would seem all models tends towards 2-3% growth per annum for the developed countries with no discernible reasons given why this growth will occur.

To make the model more realistic they seem to add some exogenous shocks to shake the model from the baseline growth but over a number of years it will return to the baseline. Yet when it inevitably fails the economists scratch their heads and try and find reasons why the models are behaving faulty. This mode of thinking is slightly backwards because they have made a conclusion and then attempt to find evidence to support this conclusion whereas a more scientific method would be to find evidence and develop a conclusion based on that. Also in all this no mainstream economists seem to consider that the models they use are inaccurate because the models are fundamentally flawed rather they believe they are inaccurate because they fail to include all the external shocks. Well I guess a lot of these models, and their flaws largely come because there is strong political pressure to tell the "right" story. If the governments measured economic data accurately then it would be even more clear that our current economic system is failing but with massaged numbers it only seems like the economy is struggling.

 

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