### Summary
The US economy is forecasted to grow at a rate of 5.8%, causing concern for the Federal Reserve and those hoping interest rates will remain low.
### Facts
- 🔥 The US economy is predicted to grow by 5.8% according to the Federal Reserve Bank of Atlanta.
- 💸 Recent strength in retail sales, auto sales, housing starts, and industrial production have contributed to this economic forecast.
### Summary
The Russian stock market's recent gains are a facade and the country's economy is in decline, according to Yale researchers. Russia's frozen foreign assets and the depreciation of the ruble have artificially inflated stock market profits. Additionally, the economy is suffering from a loss of confidence, with people and money fleeing to neighboring countries.
### Facts
- 📉 The Russian stock market's recent gains are an illusion, masking the true state of the country's struggling economy.
- 🧊 Russia has frozen inflows and outflows of foreign assets, preventing investors from cashing out and propping up the stock market.
- 💸 The depreciation of the ruble has artificially inflated the value of Russian stocks, as the country's commodities are sold in foreign currencies.
- 💼 Workers, academics, and oligarchs are leaving Russia, taking with them technical and intellectual capital essential to the country's economy.
- 💔 Trust in President Vladimir Putin and confidence in the Russian economy have eroded, leading to a lack of domestic and foreign investment.
- 🌍 Neighboring countries like Armenia, Georgia, and Kyrgyzstan have become destinations for Russian money and talent fleeing the country.
- 📉 Experts warn that Russia's economy could continue to decline and the country may even become a failed state if the costly war in Ukraine persists.
### Summary
Russia's currency, the ruble, has plunged to a 16-month low, leading to surging prices of sushi due to the country's economic challenges and rift with the West.
### Facts
- 💰 Russia's currency, the ruble, hit a 16-month low last week, as the country's current account suffers from Western sanctions.
- 🍣 Local prices of sushi in Russia are expected to surge by as much as 30% in the coming weeks due to the weakened ruble and strained relations with the West.
- 📈 Russia's official inflation rate reached a five-month high of 4.3% in July, but some economists estimate it to be over 60%.
- 🍱 Restaurateurs in Russia are already facing increased costs of sushi ingredients, such as rice, fish, and seaweed, which are imported and dependent on the dollar exchange rate.
- 💸 The embattled ruble sank past 100 to the dollar, prompting the Russian central bank to raise interest rates significantly.
- 📉 Capital outflows, reduced reliance on Russian oil by European nations, and falling export revenues have added to Russia's economic challenges.
- 🇷🇺 President Vladimir Putin held an emergency meeting to discuss measures for stabilizing the exchange rate, including export restrictions and limits on foreign currency movement.
The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
Russia's stock market is performing well on the surface, but experts believe it is an illusion meant to hide the declining state of Russia's economy, which is likely to continue suffering as long as President Putin remains in power.
Russian President Vladimir Putin has acknowledged the rising risks of inflation and has urged the government and central bank to keep the situation under control, as soaring prices could pose a threat to living standards and his upcoming re-election bid, while Russia's budget is also strained due to its military operation in Ukraine.
Despite the optimism from some economists and Wall Street experts, economist Oren Klachkin believes that elevated interest rates, restrictive Federal Reserve policy, and tight lending standards will lead to a mild recession in late 2023 due to decreased consumer spending and slow hiring, although he acknowledges that the definition of a recession may not be met due to some industries thriving while others struggle.
The Russian economy is facing several major issues, including a labor shortage, soaring inflation, a tumbling ruble, the risk of recession, a real estate bubble, and the nationalization of foreign businesses, which could lead to stagnation and a fall in GDP growth in the long term.
Russia's Finance Minister, Anton Siluanov, has stated that the country's economy is expected to grow by 2.5% or more in 2023, with inflation predicted to be around 6%.
The Russian ruble's recent volatility and decline in value reveals the underlying struggle of funding the military without damaging the national currency or causing inflation, while the Kremlin's efforts to stabilize the economy in the short term may not prevent long-term economic decline and stress on the ruble.
Credit rating agency Moody's has raised its 2023 U.S. economic growth forecast to 1.9% while cutting its estimate for China, citing mounting challenges for the latter, including weak business and consumer confidence and an aging working population.
The Bank of Israel has maintained its benchmark interest rate but warned of potential rate hikes if inflation does not continue to moderate and the shekel weakens further. Despite signs of easing inflation, the central bank highlighted the possibility of higher borrowing costs in the future. The shekel has depreciated by over 8% against the US dollar this year, contributing to higher inflation. The bank sees the economy growing at a rate of 3% in 2023 and 2024 but warns of risks if the proposed judicial overhaul leads to increased risk premium and further devaluation of the shekel.
Russia's Central Bank plans to increase support for the ruble by selling a larger volume of foreign currency each day, in response to an upcoming payment of foreign currency bonds and to reduce market volatility caused by Western sanctions.
Russia's central bank plans to increase foreign currency sales by 830% to help repay a $3 billion Eurobond and calm ruble volatility.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
Pakistan's central bank is expected to increase interest rates in order to address high inflation and bolster foreign exchange reserves, which have led to a record low value for the rupee. A Reuters poll shows that 15 out of 17 analysts are forecasting a rate hike, with some expecting an increase of at least 150 basis points. The country's economic recovery is being challenged by IMF loan conditions, import restrictions, and subsidies removal, which have caused spikes in energy prices and elevated food inflation.
The slumping Russian ruble has raised concerns of a potential exodus among Central Asian labor migrants, as their salaries decrease in value and they have less to send home to their families, exacerbating an existing labor shortage in Russia and impacting the country's long-term economic potential.
Sberbank CEO Herman Gref believes that the Russian ruble is undervalued and should be trading at 80 to 85 rubles to the US dollar, contrary to Russian President Putin's reassurances of economic stability.
Russia's central bank has raised its key interest rate by 100 basis points to 13 percent, marking the third rate hike in two months as the country struggles with higher inflation and a weaker currency.
The Chief of Defence Intelligence of Ukraine believes that if the war of aggression against Ukraine continues, the Russian economy will only hold out until 2025 and their arms supply will dry up in 2026 or earlier.
The Federal Reserve is expected to keep its benchmark lending rate steady as it waits for more data on the US economy, and new economic projections suggest stronger growth and lower unemployment; however, inflation remains a concern, leaving the possibility open for another rate increase in the future.
Russia's economy is facing stagnation due to poorly timed interest rate hikes and high inflation, according to economists, despite President Putin's claims that the country's financial problems are manageable.
Double-digit interest rates and the possibility of further hikes are hitting the Russian economy hard, as the impact of higher industrial production and rising defense spending fade, leading to stagnation or decline in household consumption and investment.
The Federal Reserve has upgraded its economic outlook, indicating stronger growth and lower unemployment, but also plans to raise interest rates and keep borrowing costs elevated, causing disappointment in the markets and potential challenges for borrowers.
Russia's economic resilience, fueled by demand from the global south, is surprising analysts and oligarch Oleg Deripaska, who had previously predicted Russia would run out of money next year due to sanctions.
Minneapolis Federal Reserve President Neel Kashkari believes there is a 50% chance that interest rates will need to significantly increase in order to combat inflation, citing a strong case for the U.S. economy heading towards a "high-pressure equilibrium."
Russia's economy is expected to grow by 1.5% this year, defying previous projections of contraction and proving more resilient than expected to Western sanctions due to rising oil prices and new export markets, though an eventual slowdown is still predicted.
A lawmaker in Russia has proposed adopting China's model of having two versions of the currency to stabilize the ruble; however, experts argue that this system may not work for Russia's economy, which is considerably smaller and relies heavily on global reference pricing in dollars.
German economic institutes are predicting that the country's GDP will contract by 0.6% in 2023, due to rising interest rates and high inflation, causing slower recovery in industry and private consumption.
The Russian rouble's decline is causing tensions between the central bank and finance ministry, as inflation rises and growth slows, threatening the country's ability to wage war effectively.
The Russian ruble weakens beyond 100 to the US dollar as foreign currency outflows and a shrinking balance of trade continue to impact the currency amid Western sanctions and the war against Ukraine.
The Russian rouble has experienced a significant decline in value this year, decreasing almost 30% against the US dollar, leading to concerns of further depreciation and economic challenges for the country.
Russia is planning to increase its defense spending by 30%, suggesting that it is preparing for the war in Ukraine to continue for years and hoping that Western support for Ukraine will decrease.
Central banks need to relax their 2% inflation targets and adopt a more pro-growth stance in order to prevent a global recession, according to the UN Conference on Trade and Development (Unctad), which warns that the recent interest rate hikes have increased inequality and reduced investment without effectively combating inflation. Unctad forecasts a slowdown in global growth and emphasizes the need to address a looming debt crisis in poor countries that is exacerbated by higher interest rates in advanced economies. The report also calls for reducing inequality and prioritizing comprehensive social protection.
Global monetary policy is expected to transition from a period of low interest rates to rate cuts by the beginning of 2024, with only a few central banks anticipated to maintain steady rates, according to Bloomberg Economics. The forecast signals a turning point in the tightening cycle and suggests that the era of ultra-low rates will not return anytime soon. The report also highlights a slower pace of descent compared to the initial rate hikes that led to the higher borrowing costs.
Higher-for-longer interest rates are expected to hinder U.S. economic growth by 0.5%, potentially leading unprofitable public companies to cut their workforce, according to strategists at Goldman Sachs, who also noted that the Federal Reserve's current benchmark rate is insufficient to cause a recession. Additionally, the firm warned that the high rates could increase the U.S. debt-to-GDP ratio to 123% over the next decade without a fiscal agreement in Washington.
Russia's economy is being increasingly structured around war, with nearly one-third of the country's spending next year devoted to defense, redirecting funds from sectors like health care and education; however, the economic impacts of the war, including inflation and a weakened ruble, are causing concerns for citizens and the government alike.
The IMF predicts that the world economy will grow at a slower pace of 2.9% in 2024 due to ongoing risks from higher interest rates, the war in Ukraine, and the eruption of violence in the Middle East, highlighting the need for tight monetary policy to combat inflation.
Russia's economy is predicted to grow by 1.1% in 2024, slower than previously expected, placing it at the bottom of the IMF's list of major emerging markets and developing economies.
Russia has reintroduced some capital controls in an effort to stabilize the ruble as the cost of war with Ukraine continues to impact the economy, with the currency gaining 3.4% after Moscow announced exporters would be forced to convert foreign revenues into rubles. These controls are similar to those implemented in 2022 after the start of the conflict, where Russia ordered exporters to swap 80% of their foreign currency revenues for rubles and banned residents from making bank transfers outside of Russia. The ruble has lost over a third of its value against the dollar this year due to the war and declining revenue from the energy industry.
Russia's rouble strengthened against the US dollar after President Vladimir Putin ordered the mandatory sale of foreign currency revenues to support the currency, but experts warn that businesses should plan for a weaker rouble in the long term.
Russia's rouble strengthens as Moscow imposes capital controls to stabilize the currency, similar to measures taken after the invasion of Ukraine in 2022, but experts warn that the rouble may weaken again in the future.
