GLOBAL ECONOMIC MONITOR

August 2014

A mixed pattern of growth is reported across OECD countries for the second quarter of 2014.  Overall, OECD GDP increased 0.4%, up from 0.2% in the previous quarter. In the United States , real GDP growth rebounded strongly and in the United Kingdom also growth remained robust in the second quarter of 2014. In Euro area and the European Union, GDP growth remained positive , however in Japan and Germany , GDP was  contracted.

 With respect to Industry performance, Russia’s Manufacturing PMI rose for the fourth month and moving up to 51.0 in July. Overall PMI for all countries exhibited expansionary trend in their respective industrial sector as the PMI remained above 50 mark. Inflation scenario signaled a slight fall in already declining inflation rates all over the world. Russian inflation declined marginally to 7.5% and US inflation rate declined to 2% in July.

The monetary stances of major economies observed a cautious approach and kept their bank rates stable.The European Central Bank (ECB) kept its benchmark interest rate at the record low of 0.15% for the second month in a row in spite of the weakness of the recovery in the Euro Zone and the threat of a deflation.

The key stock indices have shown a downward trend in the month of August with exception of DJIA of US and SENSEX of India. The stock market in Germany , Japan and China have shown downward trends, while, stock market in US and India have been the only exception, presenting an upward trend. On global commodity front, the FAO Food Price Index declined 2.1% to 203.9 points in July 2014, and further reported persistence of volatility in international sugar prices.

In addition, US trade gap declined to five-month low in June as imports dropped the most in a year and exports increased slightly. In Asia, China’s trade surplus increased to US$ 47.3 bn in July beating market forecasts, due to increase in exports and decline in imports.  In a major step to attain greater transparency and putting an end to banking secrecy in tax matters, OECD released full report of new global standard for the exchange of information between jurisdictions.

GEM for the month of August 2014 is attached.

We welcome your suggestions and comments for the same.

Warm regards,

Dr. S P Sharma

Chief Economist