Innovation - is a historically irrevocable change in the method of production of things.
J. Schumpeter


M.I. Tugan-Baranovsky

J.A. Schumpeter

N.D. Kondratiev

Gallery of prominent scientists

UA RU EN

Обращаем внимание на инновацию, созданную на данном сайте. Внизу главной страницы расположены графики,  которые в on line демонстрируют изменения цен на мировых рынках золота  и нефти, а также экономический календарь публикации в Интернете важных мировых экономических индексов 

 
Forecasts

Ifo Economic Clock and the Ifo World Economic Climate


Ifo Economic Clock and the Ifo World Economic Climate 

For a global, medium-term forecast a look at the Ifo Economic Clock showing the development of the two components of the economic climate index over the last six years visualizes the trend. The business cycle typically goes clockwise in a circle; expectations leading assessments of the present situation.

 After the slight decline in the fourth quarter of 2010, the Ifo indicator for the world economic climate has risen markedly. The rise in the world economic climate indicator is the result of more favourable assessments of both the current situation as well as the six-month outlook. The results indicate that world economic activity, after a slight dampening at the end of last year, is picking up again. The new value of the indicator is now positioned more clearly than after the preceding survey in the “consolidated upturn” quadrant. 

The Ifo World Economic Climate is the arithmetic mean of the assessments of the current situation and economic expectations for the next six months. The correlation of the two climate components can be illustrated in a four-quadrant diagram (“Ifo Konjunkturuhr”). The assessments on the present economic situation are positioned along the abscissa, the responses on the economic expectations on the ordinate. The diagram is divided into four quadrants, defining the four phases of the world business cycle. For example, should the assessments of the interviewed experts on the present situation be negative, but the expectations became positive, the world business cycle is in an upswing phase (top left quadrant).

 Portfolio inflows, exchange rate appreciation and foreign exchange market interventions in emerging market economies

 With the global recovery international capital flows regained momentum. In particular emerging market economies in Latin America and South East Asia attracted huge amounts of portfolio investments, which mainly consist of stocks, bonds and money market instruments. From the point of view of these countries one of the major causes is the ultra expansionary monetary policy of the US Federal Reserve which floods the global economy with cheap money seeking for promising investment opportunities. Since in contrast to direct investment portfolio investments are predominantly of speculative short-term nature, the countries fear the emergence of local asset price bubbles and the appreciation of their currencies. The counter measures undertaken by the emerging markets’ central banks initiated a heavy discussion on the existence of a currency war, i.e. a situation in which countries compete against each other in order to achieve a relatively low exchange rate for their currency. 

In those Latin American countries, which officially declared to let their currency float (Brazil, Chile, Columbia and Mexico), the inflows of portfolio investments accumulated to 110 billion US dollar between the first quarter 2009, the peak of the global recession, and the second quarter 2010. In order to counteract the upward pressure on the external value of the local currencies, the central banks intervened in the foreign exchange markets and bought foreign reserves amounting to 86 billion US dollar. Yet, their currencies appreciated on average by 21 percent vis-à-vis the US dollar. Not surprisingly, the majority of WES experts from that region currently assess their currency as being overvalued against the US dollar.  

The picture in floating South East Asia (Korea, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Thailand) is quite similar, with the intervention activity of the central banks being even more vigorous. While the inflows of portfolio investment, which amounted to 130 billion US dollar over the period Q1 2009 to Q2 2010, only slightly exceeded those to Latin America, the accumulation of foreign reserves was with 220 billion US dollar almost three times as high. As a result, their currencies only appreciated by on average 15 percent against the US dollar, leading WES experts to consider these currencies currently at their proper value.

 Absent any foreign exchange market interventions the currencies of the emerging market economies would have clearly appreciated far more. Thus, what is called a currency war should be seen as an attempt to preserve rather than to improve their international competitiveness. All of these countries are small open economies in which a large share of domestic production is determined from abroad.

Table 1

Inflation Rate Expectations for 2011

(based on WES QI/2011 and QIV/2010)

 

Region

QI/2011

QIV/2010

Region

QI/2011

QIV/2010

 

 

 

 

 

 

 

Average of countries *

3.4

3.1

 

North America

2.0

1.6

 

High-income countries

2.3

1.9

 

Canada

2.0

1.8

 

Middle-income countries

7.5

7.1

 

United States

2.0

1.5

 

            Upper-middle

7.5

7.2

 

 

 

 

 

            Lower-middle

7.4

6.9

 

Latin America

7.9

8.0

 

Low-income countries

7.8

7.6

 

Argentina

27.1

24.8

 

EU 27 countries

2.2

2.0

 

Bolivia

8.4

3.3

 

EU countries (old members) a)

2.1

1.8

 

Brazil

5.5

4.9

 

EU countries (new members) b)

3.3

3.1

 

Chile

3.6

3.2

 

Euro area c)

 

1.9

1.6

 

Colombia

3.4

3.0

 

 

 

 

 

Costa-Rica

6.0

5.5

 

Western Europe

2.0

1.8

 

Cuba

3.0

-

 

Austria

2.2

1.8

 

Dominican Republic

5.5

5.0

 

Belgium

2.3

2.2

 

Ecuador

3.7

3.6

 

Cyprus

2.5

2.7

 

El Salvador

2.2

1.5

 

Denmark

2.2

2.1

 

Guatemala

6.1

5.6

 

Finland

2.3

1.8

 

Mexico

4.3

4.5

 

France

1.6

1.8

 

Panama

2.5

3.5

 

Germany

1.9

1.3

 

Paraguay

6.7

4.7

 

Greece

3.8

4.6

 

Peru

2.7

2.5

 

Iceland

2.0

5.0

 

Trinidad and Tobago

15.0

13.0

 

Ireland

0.9

0.9

 

Uruguay

6.8

7.0

 

Italy

1.9

1.5

 

Venezuela

30.0

31.6

 

Luxembourg

2.4

2.2

 

 

 

 

 

Netherlands

1.7

1.3

 

Near East

5.6

5.2

 

Norway

2.0

2.2

 

Bahrain

3.0

-

 

Portugal

1.9

1.1

 

Iran

15.0

10.0

 

Spain

2.4

1.6

 

Israel

2.9

2.7

 

Sweden

2.0

1.4

 

Jordan

4.0

3.0

 

Switzerland

0.8

1.0

 

Kuwait

5.0

-

 

United Kingdom

3.5

3.2

 

Lebanon

5.0

4.8

 

 

 

 

 

Saudi Arabia

5.3

6.0

 

Eastern Europe

3.4

3.2

 

Syrian Arab Republic

7.3

8.0

 

Albania

4.1

3.9

 

Turkey

6.3

8.1

 

Bulgaria

4.5

3.2

 

United Arab Emirates

2.7

2.0

 

Croatia

2.1

1.8

 

 

 

 

 

Czech Republic

2.2

2.0

 

 

 

 

 

Estonia

3.2

2.8

 

Africa

7.3

7.6

 

Hungary

4.2

4.4

 

Northern Africa

6.4

-

 

Latvia

2.7

2.1

 

Algeria

5.1

5.4

 

Lithuania

3.1

1.8

 

Egypt

12.8

12.8

 

Poland

3.3

2.8

 

Morocco

2.6

2.0

 

Romania

5.5

7.1

 

Tunisia

4.1

3.9

 

Serbia

10.3

8.0

 

Sub-Saharan Africa

7.9

-

 

Slovakia

2.7

1.6

 

Benin

3.4

3.3

 

Slovenia

2.0

1.9

 

Burundi

10.3

8.1

 

 

 

 

 

Comoros

3.5

2.6

 

CIS

9.6

9.4

 

Congo Dem. Rep.

9.3

14.4

 

Georgia

9.5

-

 

Congo-Brazzavill Rep.

4.8

3.3

 

Kazakhstan

8.0

7.5

 

Djibouti

3.5

3.0

 

Kyrgyzstan

18.3

14.0

 

Gabon

3.5

3.6

 

Russia

9.1

8.5

 

Ghana

9.8

12.0

 

Ukraine

11.2

13.7

 

Ivory Coast

3.9

2.3

 

Uzbekistan

17.0

16.0

 

Kenya

6.8

5.3

 

 

 

 

 

Lesotho

5.9

4.2

 

Asia

3.6

2.9

 

Liberia

6.1

6.4

 

 

Bangladesh

7.3

6.8

 

Madagascar

8.9

9.3

 

 

China

4.8

3.7

 

Malawi

7.5

7.6

 

 

Hong Kong

4.3

2.9

 

Mauritania

10.0

5.5

 

 

India

8.5

7.9

 

Mauritius

4.9

2.5

 

 

Indonesia

6.7

6.1

 

Namibia

5.1

-

 

 

Japan

-0.1

-0.5

 

Niger

2.4

1.6

 

 

Malaysia

4.0

2.6

 

Nigeria

12.8

12.4

 

 

Pakistan

14.9

15.5

 

Rwanda

7.3

6.1

 

 

Philippines

4.2

4.1

 

Senegal

1.4

-

 

 

Singapore

3.0

2.5

 

Sierra Leone

13.7

15.2

 

 

South Korea

3.3

3.5

 

South Africa

4.6

4.8

 

 

Sri Lanka

8.5

7.5

 

Sudan

17.6

15.0

 

 

Taiwan

2.0

1.4

 

Swaziland

4.9

4.1

 

 

Thailand

3.5

3.1

 

Tanzania

5.0

-

 

 

Vietnam

11.3

7.8

 

Togo

4.0

1.3

 

 

 

 

 

 

Uganda

4.0

-

 

 

Oceania

3.3

3.1

 

Zambia

7.5

7.9

 

 

Australia

3.3

3.2

 

Zimbabwe

5.4

4.5

 

 

New Zealand

3.1

2.8

 

 

 

 

 

 

* Within each country group or region the country results are weighted according to the share of the specific country’s exports and imports in the total world trade.

a) Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom – b) Czech Rep., Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, Slovakia, Bulgaria and Romania – c) Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain, Slovenia, Slovakia.

Table 2

 

Legal and Administrative Restrictions for Foreign Firms

Absent

Austria

8.1

Finland

8.0

Uruguay

7.9

Latvia

7.7

Denmark

7.4

Netherlands

7.4

Cyprus

7.3

Portugal

7.3

Paraguay

7.0

Rather low

Switzerland

6.9

Spain

6.8

Sierra Leone

6.7

Belgium

6.5

Czech Republic

6.5

France

6.4

Germany

6.4

Israel

6.3

Norway

6.3

Rwanda

6.3

United States

6.3

Chile

6.2

New Zealand

6.1

Peru

6.1

Sweden

6.1

United Kingdom

6.1

Zambia

6.1

South Korea

6.0

Bulgaria

5.9

Japan

5.9

Poland

5.9

Slovenia

5.9

Benin

5.8

Ireland

5.8

Tunisia

5.8

Congo Dem. Rep.

5.7

Australia

5.4

Kazakhstan

5.4

Nigeria

5.4

Slovakia

5.4

Brazil

5.3

Canada

5.3

India

5.3

Mexico

5.3

South Africa

5.1

Colombia

5.0

Hungary

5.0

Kenya

5.0

Mauritius

5.0

Namibia

5.0

Romania

5.0

Serbia

5.0

Turkey

5.0

China

4.7

Italy

4.6

Philippines

4.5

Guatemala

4.2

Lesotho

4.2

Pakistan

4.2

Taiwan

4.2

Indonesia

4.1

Rather high

Greece

3.9

Argentina

3.8

Thailand

3.8

Croatia

3.3

Russian Federation

3.0

Ukraine

2.8

Sudan

2.7

Zimbabwe

2.7

Ecuador

2.2

Bolivia

1.8

Venezuela

1.7

Only countries with more than four responses were included

in the analysis. WES scale: 9 - absent, 5 - low, 1 – high

Source: Ifo World Economic Survey (WES) I/2011.

http://www.iccua.org/

Posted on the website: 2011-02-28

Comments on this article:

Add new comment!

* – The Fields are obligatory for filling!

Your name *:
Your e-mail address:
Your message *:
Enter the number *:
 
2008-10-09:
Прогноз ИЭЭ #6 (69). Мировая экономика получит импульс экономической активности в начале 2009
 среду 08.10.08 семь центробанков мира одновременно понизили учетные ставки на 0,5%
2007-02-06:
The forecast of the IEE #3 (59). Economic dynamics in Ukraine for 2007
In 2007 on the forecast for Ukraine following risks will be imposed
2007-01-18:
The forecast of the IEE #2 (58). Currency tendencies for 2007

Summing up 2006 it is already possible to speak, that for US dollar it was one of the best periods. We shall recollect even the end 2004 beginning of 2005 when its rate has sharply gone downwards in relation to practically all leading world currencies

2006-04-26:
The forecast of the IEE #8 (47).

In political relations between Yushchenko and Timoshenko eccentric events must happen to May 2006 (the Forecast on Hlebnikov Part 3)

2006-04-08:
Forecast IEE #7 (46). Europe: simultaneous growth of risks and sociopolitical pressure
The increase in the discount rate by the European central bank (ЕCB) in 2006 will cause a growth in the risks in the economies of incorporated Europe
2006-04-07:
The forecast of IEE #6 (45). Exchange risks of the world in 2006
afraid, that in the second half of 2006 the dollar exchange rate in the world exchange markets can fall to 30 % - 45 % in relation to ...
2005-05-10:
IEE Forecast [16]. Ukraine will not avoid crisis, if not to take precautions and not to start innovative processes
After year 2006, the economy of Ukraine will step in a phase of its first serious economic crisis
2005-04-27:
IEE Forecast (15). American economy will absorb the world capitals like a powerful pump in 2005
Even today we may predict the result of a FRS experiment on driving of the American economy from " a soft patch " at the beginning of 2000
2005-04-25:
IEE Forecast. If there are no innovative priorities, the habitation market will become a risky point of the fund for business and investors.

The real estate sector is a small drop, and but for economy it reflects the bitter history of Ukraine, and (without exaggeration) all the CIS history.

2005-04-05:
IEE Forecast (13). Investments outside of systemic innovations go "nowhere": on the lot of oil and dollar
World prices for oil and dollar exchange rate will be "the valve of constant pressure " for economic growth
2005-03-23:
IEE forecast and comment (II). If the discount rate will raise, dollar will strengthen
Though practically nobody doubts a possible FRS decision to raise a discount rate by 0,25 %, the world of analysts of the currency market has stopped waiting
2005-03-22:
IEE forecast and comments. On a sudden problem of " canceling of the obligatory sale of 50 % currency proceeds"
Political risks in management of economy do not weaken in Ukraine. That can provoke an economic crisis even in a short-term prospect (after 2006)
2005-03-18:
IEE Forecast. Dollar, oil, steel, and the global innovational system will influence the world dynamics
Factors, which will influence economic dynamics in the nearest future
2005-03-01:
IEE Forecast. Ukrainian economy is most likely to remain excessively dependant on tools of economic policy in 2005
Most likely, innovative processes, capable to bring Ukraine forward at any commodity or technological sphere will not start in
2005-02-25:
IEE Forecast. The World Economics Will Run a Fever For Some More Time
According to leading economist's opinion, continuous decrease of long-term rates in the world's most developed countries is one of the greatest puzzles in the financial world today. The problem is important for the USA, and other national economics
2005-02-23:
IEE Forecast. The World Economics Will Run a Fever For Some More Time
The world economics will run a fever for some period (5-10 years). It will suffer decreased production effectiveness, raised consumption of oil in China, price fluctuations for fuel. After that, we will experience an unprecedented and grand innovational project. The project will change the quality of all the world economics, absorb all the free capital, and increase long-term yield.
2005-02-15:
IEE Forecast: Growth of a dollar exchange rate can cause growth of the external economic risks for Ukraine
As to the internal factors, which compensate specified risks, it is necessary to carry significant potential of economic growth to them due to activization of internal consumption. It is a question of activization of the factors removing restrictions on ways of incomes growth of people, of fine and average business.
2005-02-07:
IEE Forecast. In economic there can be a slow economic growth with the crisis periods
The deficiency growth of the account of current operations in the USA is connected first of all with smooth and deep downturn of a discount rate.
2005-02-01:
IEE Forecast: on a dollar exchange rate, OPEC conference, and session of FRS board, Bush's speech and meeting of G7.
Events of this week will leave the trace in 2005 World discussions
2005-01-19:
IEE Forecast
The committee for Federal Reserve System (FRS) in the USA (FOMC) will raise a discount rate for 0,25 % having brought it up to the value of 2,50 % at the next session, which will take place on February 1-2, 2005.
2004-12-30:
IEE. In the coming year the price for gold will continue to grow
Gold already would seem ceased to carry out function of money, again in the price because of the monetary markets dynamics.