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Global
Top Economic Reports July 22, 2013 By Global Economic Team| UK Economics and Strategy Productivity Slowdown Largely Cyclical: Good News for the Medium-Term Outlook: The UK productivity slowdown is primarily cyclical in nature, rather than structural: Our historical and sectoral analysis suggests that the weakness in productivity since the onset of the financial crisis has been primarily cyclical rather than structural in nature, reflecting the severity and longevity of the growth slowdown. Comparisons with the robust productivity performance in the previous two recessions provide a misleadingly negative view on the current state of underlying productivity, in our opinion. Jonathan Ashworth Turkey Economics: A Q&A on Turkey: A Reflection of 50 Meetings Over a three-week period, I met with a total of 50 investors in New York, Boston, London, Paris, Singapore, Hong Kong and Taipei. The profile of investors was balanced between fixed-income and equity as well as hedge funds and real money. Needless to say, the focus was mostly on Turkey given the rapid deterioration in market conditions, steep rise in interest rates and weakening currency. This note is based on the most commonly asked questions during these meetings. In the Q&A section, we have intentionally left out the questions that we received on politics in order to focus solely on the most immediate issues at hand. Tevfik Aksoy China Economics: Growth Momentum Still Weak: Lower 2Q GDP growth reading in YoY terms, but sequential growth improved. GDP growth decelerated to +7.5% YoY in 2Q (MS: +7.6% YoY; consensus: +7.5%), down from +7.7% YoY in 1Q. However, we estimate sequential growth improved to +1.7% QoQ SA in 2Q from +1.5% QoQ SA in 1Q. In view of the high base from 4Q12, sequential growth has to accelerate further to ensure achieving the government's annual growth target of 7.5% YoY for 2013. Helen Qiao US Economics Business Conditions: As Tapering Looms, Financial Conditions Make Companies More Cautious The Morgan Stanley Business Conditions Index eased 2 points to 69% in July as a result of seasonal adjustment factors; unadjusted, the index improved 3 points to 58%. Vincent Reinhart UK Economics and Strategy Productivity Slowdown Largely Cyclical: Good News for the Medium-Term Outlook: The UK productivity slowdown is primarily cyclical in nature, rather than structural: Our historical and sectoral analysis suggests that the weakness in productivity since the onset of the financial crisis has been primarily cyclical rather than structural in nature, reflecting the severity and longevity of the growth slowdown. Comparisons with the robust productivity performance in the previous two recessions provide a misleadingly negative view on the current state of underlying productivity, in our opinion. Jonathan Ashworth India Economics: Government Liberalizing FDI Caps Further to Improve Investor Sentiment What's new: In a move to improve investor confidence, the government on July 16 announced further liberalization of caps on foreign direct investment (FDI). In addition to hiking FDI limits in some sectors, the government has changed the FDI route to the automatic route (i.e., only notification to the Reserve Bank of India is required) compared with the earlier route of requiring approval from the Foreign Investment Promotion Board (FIPB). For eight of the 13 sectors, the government has changed the FDI route to automatic, and for four sectors, it has liberalized the cap. With regard to insurance, the cabinet last year approved hiking the FDI limit to 49%; however, the proposal is pending Parliament's approval. Thus, the latest announcement on FDI in insurance is a reiteration of the same. Chetan Ahya |
