By Edward Hugh: Barcelonabr /br /Russia's foreign-exchange reserves have been now been declining very rapidly since mid August, and as the money goes so does the faith that the large stock of reserves the country built up during the boom times would be sufficient to see them through any downturn in energy prices. As the money leaves, so it seems does the decade of economic growth and stability which they symbolised. Indeed so rapid has been the decline that Russia's international reserves, which are the third-biggest after those of China and Japan, have now fallen $161 billion, or 27% percent, since 8 August last, and decreased by $17.9 billion to $437 billion in the week to 5 December. Investors have now pulled $211 billion out of the country since August, according to estimates by BNP Paribas.br /br /br /pa href="http://1.bp.blogspot.com/_ngczZkrw340/SUbQptNe4tI/AAAAAAAALyE/K0xlBOy3AlA/s1600-h/russia+GDP.png"img id="BLOGGER_PHOTO_ID_5280137028067844818" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: ...

Controversy surrounding the Romanian economy is nothing new, nor, as a href="http://globaleconomydoesmatter.blogspot.com/2008/11/romania-votes-under-new-electoral.html"Manuel points out in his post on the recent election/a, are Romanian politics strangers to tumult. Nonetheless the intensity of controversy has grown considerably of late, with a wide variety of assessments being offered concerning the likely impact of the intensifying international credit crisis on the short to medium term outlook for the Romanian economy. National Bank of Romania (NBR) governor, Mugur Isarescu, has been consistently arguing that the country should be able to avoid an excessively "hard landing"as the bank attempts to cool its evidently overheated economy and engages of fire-extinguising activities in the banking sector trying to control the impact of set of adverse external circumstances that are largely beyond its control. But most of these comments (or at least the more convincing ones) preceded the meltdown in the international financial markets which followed the Lehman Brothers ...

by Edward Hugh: Barcelonabr /br /Controversy surrounding the Romanian economy is nothing new, nor, as a href="http://globaleconomydoesmatter.blogspot.com/2008/11/romania-votes-under-new-electoral.html"Manuel points out in his post on the recent election/a, are Romanian politics strangers to tumult. Nonetheless the intensity of controversy has grown considerably of late, with a wide variety of assessments being offered concerning the likely impact of the intensifying international credit crisis on the short to medium term outlook for the Romanian economy.National Bank of Romania (NBR) governor, Mugur Isarescu, has been consistently arguing that the country should be able to avoid an excessively "hard landing"as the bank attempts to cool its evidently overheated economy and engages of fire-extinguising activities in the banking sector trying to control the impact of set of adverse external circumstances that are largely beyond its control. But most of these comments (or at least the more convincing ones) preceded the meltdown in the international financial markets which ...

Business New Europe Jason Corcoran in Moscow October 28, 2008The richest man in Ukraine and reputedly the whole of the former Soviet Union, Rinat Akhmetov, is embarking on a bold acquisition programme to pick up cheap energy assets across Central and Eastern Europe at a time when other oligarchs in the region are sweating over making margin calls. Akhmetov, estimated by the Russian daily Kommersant to be worth $31.5bn, has largely been insulated from the international financial crisis due to the consistent demand for coal and electricity and his minimal exposure to the equity markets. DTEK, Akhmetov's main Ukraine-based energy holding, is now talking to banks about assembling a cash pile to target coal assets worth up to $500m in Russia and the rest of Central and Eastern Europe. "We are pretty ...

Financial NewsJason Corcoran in Moscow 13 October 2008 Many holdings are up for saleOligarchs on opposing sides of the cash crisis are set to trigger a boom in merger and acquisition activity in Russia and the Commonwealth of Independent States.Cash-tight tycoons are being forced to sell holdings to meet pending margin calls while their rouble-wealthy counterparts are sizing up distressed assets affected by the liquidity crunch.Oligarch Oleg Deripaska had to sell a stake in Canadian auto parts maker Magna to meet a $1bn (€734m) margin call while Ukrainian billionaire Kostyantin Zhevago was forced to sell a large stake in Swiss-based ore miner Ferrexpo worth $180 in order to meet a margin call by JP Morgan.Analysts are predicting Deripaska, who has $28bn, may have to divest further holdings in his Basic Element investment vehicle to shore up his finances….

Morgan Stanley (MS) announced yesterday (Monday) that it closed its long-awaited deal with Mitsubishi UFJ Financial Group (ADR: MTU), giving Japan’s largest financial group a 21% stake in the beleaguered U.S. investment bank. Meanwhile, Sovereign Bancorp Inc. (SOV) confirmed last night that it has agreed to be bought out by Spain’s Banco Santander SA (ADR: STD) with regards to a possible buyout. Mitsubishi UFJ first announced its intention to acquire a stake in Morgan Stanley on Sept. 22, but shares of the investment bank fell 60% last week as credit market turmoil and investor panic gripped the markets, putting the deal in jeopardy. The deal was renegotiated yesterday after the U.S. government signaled over the weekend that it was prepared to protect Mitsubishi’s investment, the The Wall Street Journal reported. In September, MUFG agreed to buy $6 billion in ...

by Edward Hugh: BarcelonaThe medium-term outlook is sensitive to external developments and policy responses. A benign external environment, featuring even higher steel prices and FDI, could produce growth in excess of 7 percent, but inflation could prove hard to control under a peg. Under an adverse external outlook, by contrast, the peg could lead to external sustainability problems.IMF 2006 Article IV Consultation Staff Report (February 2007)Ukraine's economy is in trouble, there is no doubt about it. The cost of protecting debt against a sovereign default by Ukraine's government soared to a record on Friday, following the arrival of a twin storm of both political and financial uncertaintly. The Ukraine president Viktor Yushchenko announced earlier in the week (only to be challenged on Saturday by his perpetual rival Julia Tymoshenko) that he was going to call what would be the country's third parliamentary elections ...

Claus Vistesen: CopenhagenBrazil is a resource rich country in transition towards a much more diiversified economy where industry and high value services will begin to play an increasing role. Brazil has ample supplies of energy and agricultural products, and is currently hitting that “sweet spot” where a demographically driven growth dividend becomes available. Thus we can increasingly expect to see above trend “catch up” growth as the Brazillian economy benefits from the new wealth which accrues from the rapid global rise in commodity prices while the strong supply of young labour underpins the labour market and significant productivity improvements become available as the economy generally moves towards ever higher-value-added sectors of activity.Perhaps the most telling sign of Brazil's rising status as a new global force to be reckoned with was the recent announcement by the National Petroleum Agency (ANP) of the discovery of a new offshore ...

by Edward Hugh: Barcelona

Executive SummaryIndia’s latest run of strong economic growth and continuing macroeconomic stability is a tribute the important progress made in recent years in macroeconomic management techniques as well as to an earlier generation of structural reforms. India’s economy has now expanded at an average rate of about 8½ percent for four years running, on the back of rising productivity and sustained investment. Inflation after ebbing in the second half of 2007 has now returned in full force and become one of the most pressing macro problems facing the Indian economy. In fact the record capital inflows which have followed the bout of global financial turbulance and a slowing U.S. economy, while in the long run beneficial, have only served to complicate the application of sound monetary policy. The current account deficit, which had remained modest, is now – on the back of high oil

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Claus Vistesen: CopenhagenBrazil is a resource rich country in transition towards a much more diiversified economy where industry and high value services will begin to play an increasing role. Brazil has ample supplies of energy and agricultural products, and is currently hitting that “sweet spot” where a demographically driven growth dividend becomes available. Thus we can increasingly expect to see above trend “catch up” growth as the Brazillian economy benefits from the new wealth which accrues from the rapid global rise in commodity prices while the strong supply of young labour underpins the labour market and significant productivity improvements become available as the economy generally moves towards ever higher-value-added sectors of activity.Perhaps the most telling sign of Brazil's rising status as a new global force to be reckoned with was the recent announcement by the National Petroleum Agency (ANP) of the discovery of a new offshore ...