Posts Tagged ‘ GDP ’

Abenomics helped to boost by revised data , BOOMING

Japan's hopes for recovery boosted by revised data.

Japan has revised its growth numbers between January and March, adding to hope of recovery for the world’s third-largest economy.

The Japanese economy grew 1% in the first three months of the year, an increase from the primary estimates of 0.9%.

The cabinet office said that this would indicate a yearly growth of 4.1%.

The revision also had an encouraging effect on investors – the Nikkei 225 index jumped over 3% in early trade.

Martin Schulz of the Fujitsu Research Institute told the BBC that the policy measures introduced by Prime Minister Shinzo Abe and the Japanese central bank to drag the economy out of stagnation, spur growth and strengthen the yen – which had fallen by nearly 25% against the US dollar last November – were finally starting to be felt.

These measures included doubling the national money supply and keeping long-term interest rates low in order to boost domestic demand and generate higher consumer prices.

In light of the revised data, which indicated an increase in domestic demand, analysts have said that the Japanese policymakers appear to have had the right idea.

20130610-172934.jpg

Japan’s First Quarter GDP Rose Annual 3.5% vs Forecast 2.7% Rise

tokyo

tokyo

Japan’s First Quarter GDP Rose Annual 3.5% vs Forecast 2.7% Rise

ABENOMICS  1- OLD WAY 0 !

Japan’s economy grew more than analysts estimated in the first quarter as consumer
spending
and exports climbed.

The key factor is consumer spending s up , they key factor .A BOOMING  stock market is making consumers feel richer helping to fuel spending and growth in the world’s third-biggest economy.

Yen

The yen has weakened more than 16% against the USD and 14% against the € this year, the largest declines of the 16 major currencies. The Nikkei 225 Stock Average (NKY) rose 45% , more than twice the gain in the Standard & Poor’s 500 Index.

Japanese government bonds halted the biggest three-day slide in almost a decade yesterday after the central bank announced a 2.8 trillion yen infusion of funds. Benchmark 10-year yields traded at 0.85 percent yesterday after surging .

 

All good news , may it continue in Japan .

Tony Evans

From A booming Japan

 .

http://www.bloomberg.com/news/2013-05-15/japan-s-economy-grew-more-than-forecast-3-5-in-first-quarter.html

China’s growth could slow sharply by 2030 – Fed

Reading the below article and there’s one point that stuck with me , GDP is man made ! After living in Shanghai for a period I saw that a “great deal” of things are fake and it’s a given that the population is not correct as funding was based on population .I believe that 10/15% variable is conservative overstated .

But at the current rate China generates GDP growth in a week equivalent to Cyprus yearly GDP & 12.5 weeks GPP growth of Greece !!

China might be slowing but it’s still growing !

China's growth could slow sharply by 2030 – Fed.

China’s growth could slow sharply by 2030 – Fed

The US Federal Reserve believes that global economic trends might shift sharply by 2030, as China faces mounting headwinds – potentially forcing it to fade dramatically in the years ahead.

Declining productivity and an aging population could shrink the trend growth in China to around 6.5% by 2030, according to a new study. Moreover, if the current forces that are undermining economic activity combine in a worst-case scenario, the pace could fall to under 1%.

Notably, one of the Fed’s Senior Adviser wrote that GDP growth rate is the sum of the growth in employment and the growth in output per employee, and China faces challenges in both of these categories. Meanwhile, a US diplomatic cable recently released by Wikileaks has shown that Li Keqiang, China’s new premier, called the GDP figures ‘man-made’ and therefore unreliable as they underestimate inflation.

Chinese economic data is often questioned by sceptics who believe that government statisticians refine the numbers to make the Communist Party look like it’s bringing prosperity to its citizens.

Nonetheless, in the midst of the financial crisis, buoyant Chinese growth helped to support the global economy after recessions in the United States and Europe.

Economists commented that most investors would agree that the Chinese economy cannot maintain the extremely rapid growth rates it has seen over the past decades. The question is thus not whether the Chinese economy will slow but by when and by how much.

If you are looking for impartial and up-to-date professioanl financial advice about international investment funds, speak to a deVere Financial Adviser for a whole-of-market approach.

Re blogging “Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory”

A great article in the Telegraph on the Yen , Abenomics and debt ,
Looking at Japan is self financing its debt bit for how long ? Abenomics makes JGB looks very interactive , negative yield 1%!

2008 financial crash made many people remember that borrowed money has to be paid ,

In my opinion they will tax , tax , tax ! Which history shows us it never never works , I believe increase the consumption TAX to 10% is a much better option , and then invest in projects to keep Japan in Competitive position .
Japan should stick to its strengths and invest in R&D and engineering .

As always the markets will decide .

Tony Evans

Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory

By Ambrose Evans-Pritchard, in Tokyo4:04PM GMT 26 Mar 2013

“A debt ratio of 245pc of GDP is not really safe, and it is not happening because we are investing,” said Takehiko Nakao, Japan’s ‘Mr Yen’ or vice finance minister in charge of the exchange rate.
Mr Nakao said the scope for further fiscal stimulus is running out and the country must restore public finances to a sustainable path by the middle of the decade. “We can’t continue to expect people to lend money to us,” he told The Daily Telegraph.

The comments touch on an acutely sensitive topic. A number of global hedge funds and banks have begun “shorting” Japan’s debt, the world’s biggest at $23 trillion.
They are mostly taking positions through the credit default swap (CDS) market, betting that Japan will be the next big crisis theme after the US subprime crash and the eurozone debt debacle. The radical new government of premier Shinzo Premier is determined to prove them wrong.

Mr Nakao brushed aside criticism that Japan is engaged in currency war or trying to push down the yen, but acknowledged that there are limits to what the Bank of Japan (BoJ) can do under the rules of global finance.

“We didn’t blame other countries after the Lehman crisis when they had large falls in their currencies. We are using monetary policy to tackle persistent deflation in Japan, and avoid a deflationary spiral,” he said.

Mr Nakao said there is a “shared view” among the developed countries that central banks can legitimately buy any form of domestic asset – as the Bank of England and the US Federal Reserve have been doing – but overseas bonds are another matter.
“We cannot buy foreign assets at our leisure. That would be the equivalent of currency intervention by the Bank of Japan,” he said.

The world turned a blind eye to Japan’s purchases of US Treasuries in 2011 after the Fukushima disaster, when the yen surged to a record Y76 against the dollar. But those were unique circumstances.
The yen has since weakened dramatically to around Y95 under Mr Abe, whose “Abenomics” stimulus policies include a shake-up at the BoJ and a new team of governors committed to reflation.

Veteran Japan-watchers say there is a graveyard full of foreign funds that bet against Japanese debt over the last two decades, only to learn the hard way that the country is sui generis, with vast overseas assets and a captive pool of domestic savings.

The great unknown is whether this is now changing as Japan’s trade surplus evaporates. The International Monetary Fund says gross public debt will reach 245pc of GDP this year. Net debt – stripping out the BoJ’s liquid assets – is much lower but it too is now rising fast.

The IMF says net debt will reach 145pc in 2013, well above the usual safety threshold. Figure has jumped by 50 percentage points since 2008, roughly the same as the jump in Spain and Portugal over the same period.
Japan is the only major nation that has not begun to tighten fiscal policy. The IMF says the primary budget deficit was 9pc of GDP last year, yet the Abe government is launching a fresh $200bn blast of stimulus worth 2pc of GDP to kick-start recovery.

Mr Nakao plan is to withdraw the stimulus gradually once recovery gains traction, with a rise in VAT from 5pc to 8pc next year, and then to 15pc. Mr Abe has vowed to cut the primary deficit to 3pc by 2015. “We think that is unrealistic,” said Junko Nishioka from RBS.
Chisato Haguma, chief equity strategist at Mitsubishi UFJ, said the government must curb “exploding social security outlays” as Japan’s ageing crisis hits.
However, he said the high debt level is overstated since the vast assets of the state – including land – dwarf liabilities, and could be sold off if needed. “They have more options than assumed. There is not going to be a fiscal crisis in the next two to three years, but there could be one later,” he said.

Foreign hedge funds have made much of recent moves by the state pension fund GPIF to start selling off part of its vast holding of government bonds (JGBs).
Mr Nakao said the selling is a temporary blip caused by bulge of retiring baby-boomers. The GPIF will soon be a net buyer again and will continue to accumulate for another thirty years.
The IMF has warned repeatedly that Japan is pushing its luck. The Fund has advised fiscal tightening of 10pc of GDP by 2020 just to stabilise the debt level.

It said there is plenty of “low-hanging fruit”, advising Tokyo to raise the retirement age from 65 to 67, and remove the tax subsidy for dependent spouses to make it worthwhile for women to continue working.
Yet the Fund said Japan is uncomfortably close to a debt compound trap, and could face trouble if borrowing costs ratchet up. “Even a moderate rise in yields would leave the fiscal position extremely vulnerable,” it said, warning that this would have implications for the entire world.
“Even a relatively small increase in the sovereign risk premium would make fiscal consolidation more difficult, pose challenges to financial institutions, harm growth prospects in Japan, and could spill over to global risk premia and growth. In this regard, Europe’s recent experience offers a cautionary tale. Once market confidence is lost, regaining it becomes very difficult.”

Italy credit downgrade – uncertainty of election result

On Friday Fitch downgraded Italy’s sovereign debt rating by one notch to “BBB+” from “A-” , also stated the outlook is negative .

The problem is the election didn’t have a clear winner and as such no new Government could be formed .
One thing markets hate more than anything ells is uncertainty .With good reason Italy is the 8th largest economy by GDP in the world but is the 3 largest issuer of sovereign debt ! This year Italy has $414 billion in debt maturing and needing finance ! Thus the uncertainty will possibly increase interest rate it need to ay on its debt , diverting billions of much needed money from the economy to debt payment .Fitch noted it expected Italy public debt would peak at 130% of GDP increased from previous estimate of 125% . An extra $100 billion! The financial crisis has desensitised people of the magnitude of a billions ! The media talk today as its not a big thing !

Fitch noted that Italy’s ongoing recession “is one of the deepest in Europe,” and warned that “the increased political uncertainty and non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy.”

Reminds me of quote by Adam Smith :
”It is the highest impertinence and presumption… in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense… They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will”

Tags : Europe , credit downgrade ,Fitch , GDP , Italy ,Election ,Adam Smith

<span>%d</span> bloggers like this: