The economy has contracted less than predicted, by 10.1% in the first half of the year, but the OECD suggests there may be a storm of bad debt gathering.  The Economy Ministry is not over-optimistic regarding growth, suggesting that the country will not be able to match last year's rate of growth until 2012.  The government is considering borrowing $20 billion a year overseas from 2010 to 2012.  Analysts have predicted that alcohol consumption will fall by 5% this year, with imported drinks faring the worst.  'This begins to look like deliberate procrastination', Vladimir Putin has told senators prevaricating over a bill that would introduce harsher penalties for violating anti-monopoly laws.   'GAZ and AvtoVaz, which received enormous federal funds to prop them up, are vivid examples of government inefficiency and incompetence' - says a commentator ...

by Edward Hugh: Barcelonabr /br /br /pa href="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s1600-h/bulgaria+population.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 258px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5357485959172294626" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s400/bulgaria+population.png" //abr /br /br /The International Monetary Fund this week forecast the recession in Bulgaria would be deeper than it previously predicted. Such a decision should come as no surprise to anyone, since the country's economic dynamics in both the short and long term look extremely unstable, and Bulgaria is now almost certainly headed towards a series of more or less hair-raising roller-coaster rides. Even the briefest of glances at the population chart above should lead even the most sceptical among us to stop and think a little about the possible economic implications of such an appauling demographic outlook. As can be seen, the opening to the west brought a sharp outflow of people in the late 1980s (mainly ethnic Turks), but the important thing ...

In the currency market, the dollar moved higher again against the euro. Late Tuesday, the euro was trading at $1.3918 vs. $1.3986 on Monday. The buck has been benefiting lately from weak world equity markets, as investors begin to exhibit greater risk aversion.

The euro got an initial boost as the Economy Ministry in Berlin said German factory orders expanded 4.4% in April. That marked the biggest advance in two years for the zone’s largest economy, but its influence petered out quickly.

A lack of clear direction could be ongoing. “The markets are looking very indecisive at this point,” said T.J. Marta, chief strategist at Marta on the Markets. “It could be the exhaustion of investors and traders, having just priced in — and then out — financial Armageddon. It could also be the cross currents of data, as investors are barraged by conflicting reports.”

There is also caution ahead of

...

by Edward Hugh: Barcelonabr /br /Official figures from the Federal Statistics Office this morning show that Germany's recession worsened considerably in the first quarter, with the economy shraning by 3.8 percent compared with the previous three-month period - that is equivalent to a 15.2% contraction as an annualised rate. This is the fourth consecutive quarter of contraction, and is the worst performance by the German economy since at least 1970 - when the German statistics office started the present time series. It is also the first time since reunification in 1990 that the German economy has experienced so many quarters of negative growth. GDP has was dragged down by the drop in export and and the consequent weakness in investment.br /br /br /pa href="http://2.bp.blogspot.com/_ngczZkrw340/Sg1okeoxvFI/AAAAAAAAN6s/wHYQ9UkLoh0/s1600-h/german+GDP+2.png"img id="BLOGGER_PHOTO_ID_5336036109412580434" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 240px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/Sg1okeoxvFI/AAAAAAAAN6s/wHYQ9UkLoh0/s400/german+GDP+2.png" border="0" //abr /Year on year GDP fell by 6.7%, ...

Industrial production in Germany, Europe’s largest economy, dropped for the sixth consecutive month in February as the global recession hit demand for German product, both at home and abroad. Output fell a seasonally adjusted 2.9 percent from January, when it slumped 6.1 percent, the most since data for a reunified Germany began in 1991. From a year earlier, output was down by 20.6 percent.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sd3cGgsj5cI/AAAAAAAANeY/C0huGfcX930/s1600-h/german+ip.png"img id="BLOGGER_PHOTO_ID_5322652339035956674" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 219px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sd3cGgsj5cI/AAAAAAAANeY/C0huGfcX930/s400/german+ip.png" border="0" //abr /br /Although the pace of decline was slower than in January, this month’s drop was led by a 4.5 percent slump in production of investment goods, according to the Economy Ministry, and this certainly does not bode well for the future. The rate of decline in manufacturing activity continued to slow in March, although activity in the sector continues to contract at a sharp ...

by Edward Hugh: Barcelonabr /br /Well sometimes it never rains but it pours, and as far as Germany is concerned, economically speaking (and my condolences to each and every German for yesterday's tragedy) more than a "rainy season" what we seem to have is a monsoon, with a torrential downpour one day after the next. The lastest piece of bad news comes on the export front, with German exports dropping for a fourth consecutive month in January, as what is still Europe’s largest economy fell ever deeper into what is now its worst recession in 60 years. Working day and seasonally adjusted sales abroad fell 4.4 percent from December (when they dropped 4 percent). According to provisional data from the Federal Statistical Office, Germany exported goods to the value of EUR 66.6 billion and imported commodities to the value of EUR 58.1 billion in January 2009. Exports were thus 20.7% ...

Industrial production in Germany fell by 4.6 per cent in December, more than in any month since German reunification in 1990, according to the Economics Ministry in Berlin today. This follows a 3.7 per cent fall in November. As a result output fell by a record 12.0% over the December 2007 figure.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SYyENe2J4sI/AAAAAAAAMlI/mTDJ9fNUv2k/s1600-h/germany+IP.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 219px;" src="http://1.bp.blogspot.com/_ngczZkrw340/SYyENe2J4sI/AAAAAAAAMlI/mTDJ9fNUv2k/s400/germany+IP.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5299756228661600962" //abr /br /On Thursday, the Economy Ministry reported that German new orders fell 25.1% in the 12 months to December, falling 6.9% on the November number. Which means there is worse to come, a feeling which is only confirmed by the German January Purchasing Managers Index which showed that manufacturing contracted at its fastest pace in over 12 years in January as further slumps in demand also lead employers to cut staff at a record pace. The headline index in the Purchasing ...

Russia’s current woes can be readily summed up in just one single variable – the value of the ruble – and this value, as we all know, is falling. Almost uncontrollably so.br /br /blockquoteThe bank’s target will be “very quickly” breached without more intervention, said Gaelle Blanchard of Societe Generale SA in London. “Right now the market is convinced it wants to see the ruble lower,” Blanchard said. “As long as the central bank gives these targets, then speculators are going to have something to aim for.”br /br //blockquoteblockquote“The market is testing whether the authorities see this band as something permanent or something that will move,” said Lars Rassmussen, an emerging markets analyst at Danske Bank A/S. “Our view is that they’ll move it because it’s not worth wasting the reserves for a band that is obviously not wide enough.”/blockquoteblockquoteFirst Deputy Prime Minister Igor Shuvalov expressed regret that the general …

Germany's economy continued to contract in January, and even more rapidly (slightly) than in December, according to the latest flash estimates for the Markit PMI. br /br /br /The estimates showed that the composite Markit purchasing managers' index (PMI) fell to 38.0 from December's final 39.5 reading. Any reading below 50 means contraction from one month to the next, so what this means is that the German economy was contracting more rapidly in January. Taken together, the surveys of the manufacturing and service sector showed business activity shrinking at its fastest pace since the composite PMI series began in January 1998. A 38 reading on the monthly PMI is probably equivalent to something in the order of a 10% annual rate of GDP contraction (or a 2.5% quarter on quarter drop), which is, well, massive. Nor does this seem unreasonable, since on initial estimates it seems that German GDP contracted ...

by Edward Hugh: Barcelonabr /br /Unemployment in Germany rose last month for the first time since February 2006, thus bringing inauspiciously to an end an unprecedented 34 month labour-market recovery. Figures released by the Federal Labour Agency today show that the number of those seeking employment in Germany rose by a seasonally-adjusted 18,000 in December. The change is small, but the significance is great, since this is obviously but the first month of many when unemployment will rise in Germany, and this rising unemployment will now, in its turn, feed back into the industrial slowdown which is already underway. The seasonally adjusted unemployment rate remained unchanged (following data revisions for previous months) at 7.6 percent.br /br /Not a surprise. But not good news.br /br /br /pa href="http://4.bp.blogspot.com/_ngczZkrw340/SWThjoirXkI/AAAAAAAAMC8/kM2G_NPNWxA/s1600-h/german+unemployment.png"img id="BLOGGER_PHOTO_ID_5288599864734342722" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 190px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SWThjoirXkI/AAAAAAAAMC8/kM2G_NPNWxA/s320/german+unemployment.png" border="0" //abr /br /In a separate ...