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Russia Monthly Economic Developments (Inglês)

Financial market volatility has once again increased in response to concerns about the phasing out of Quantitative Easing (QE) in the United States (US). However, the initial strong reaction by financial markets was tempered by assurances from the Federal Reserve that it intends to start slowing down the pace of its purchase later this year only if the economy continues to improve and when unemployment rate falls below 7 percent. The European Central Bank also assured markets that rates will remain low for longer. Monetary conditions in high-income countries are projected to remain accommodative and supportive of growth. Global growth is expected to improve, despite softer than anticipated activity in the second quarter. Growth is currently driven by accelerating growth in the US, which is likely to benefit in the second half of the year from a recovering housing market and employment growth. But there are also early indications of improving activity elsewhere: First, the latest Purchasing Manager Indices (PMIs) indicate that the UK services sector expanded at its fastest pace in more than six years. Also Euro Area PMIs achieved a first, albeit faint, rise in activity for 18 months, sustained by the rebound in German business activity, while the downturns in France, Italy and Spain eased in July. Second, industrial production growth has been accelerating and has reached growth rates of 3.8 percent and 5.9 percent in the Euro Area and Japan respectively. In contrast, growth in developing countries has been slowing, even though it remains relatively strong. Q1 growth in developing countries came in at 4.6 percent, down from 5.5 percent in Q4 2012, thereby registering the slowest quarterly growth rate in more than a year. The latest industrial production figures suggest further slowing, with industrial production growth falling to 2.9 percent in May, down from 8.0 percent in January. Also, prospects for a quick recovery look slim, with PMIs in developing countries remaining weak. China’s PMI stood at 51.3 in July, unchanged from June and just marginally above a 20-month low of 51.1 in April. Excluding China, the developing countries’ PMI fell below the critical 50 level for the first time since the end of 2011.

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