|
Item |
Price |
Unit |
Fluctuation |
|
PSF |
1092.98 |
USD/Ton |
0% |
|
VSF |
2064.17 |
USD/Ton |
0% |
|
ASF |
2400.65 |
USD/Ton |
0% |
|
Polyester POY |
1069.56 |
USD/Ton |
0% |
|
Nylon FDY |
2638.77 |
USD/Ton |
-1% |
|
40D Spandex |
5699.11 |
USD/Ton |
-1% |
|
Nylon DTY |
5769.37 |
USD/Ton |
0% |
|
Viscose Long Filament |
1327.19 |
USD/Ton |
1% |
|
Polyester DTY |
2420.17 |
USD/Ton |
-1% |
|
Nylon POY |
2588.02 |
USD/Ton |
0% |
|
Acrylic Top 3D |
1233.51 |
USD/Ton |
0% |
|
Polyester FDY |
2857.36 |
USD/Ton |
0% |
|
30S Spun Rayon Yarn |
2669.99 |
USD/Ton |
1% |
|
32S Polyester Yarn |
1733.15 |
USD/Ton |
0% |
|
45S T/C Yarn |
2794.91 |
USD/Ton |
0% |
|
45S Polyester Yarn |
2841.75 |
USD/Ton |
0% |
|
T/C Yarn 65/35 32S |
2545.08 |
USD/Ton |
0% |
|
40S Rayon Yarn |
1920.52 |
USD/Ton |
0% |
|
T/R Yarn 65/35 32S |
2342.1 |
USD/Ton |
-1% |
|
10S Denim Fabric |
1.09 |
USD/Meter |
0% |
|
32S Twill Fabric |
0.92 |
USD/Meter |
0% |
|
40S Combed Poplin |
1.01 |
USD/Meter |
0% |
|
30S Rayon Fabric |
0.74 |
USD/Meter |
0% |
|
45S T/C Fabric |
0.75 |
USD/Meter |
0% |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.15614 USD dtd.18/08/2015)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The Finance Ministry has imposed definitive anti-dumping duty on ‘flax’ or ‘linen’ fabric imports from China and Hong Kong. The duty would be applicable only on those flax fabrics with flax content of over 50 per cent. ‘Flax’ and ‘linen’ are synonymous and these fibres are used to produce yarn and fabric. It is often used as in generic term to describe a class of woven bed, table and kitchen textiles because traditionally flax was widely used for towels, sheets etc.
Jaya Shree Textiles, a unit of Aditya Birla Nuvo Ltd, had filed the petition seeking continuation of anti-dumping duty on ‘flax’ fabric imports from China and Hong Kong. Based on the recommendations of the Designated Authority in the Commerce Ministry in its sunset review, the Revenue Department has now imposed anti-dumping duty of $ 0.75 a metre on ‘flax’ fabric imported from China. In the case of ‘flax’ fabric imported from Hong Kong, the anti-dumping duty has been pegged at $ 0.63 a metre.
SOURCE: The Hindu Business Line
Over ten lakh powerlooms in Bhiwandi and Malegaon - estimated to be over 50% of the total in India, have stopped production since huge losses the two textile centres incurred due to market slowdown and closure of processing units in Rajasthan. While about 2.5 lakh powerlooms are running only 2-3 days in a week since last one month, the weavers in Bhiwandi have decided to stop work from August 16 till August 31. The alarming economic situation at both the textile centres of Maharashtra has left about one million people jobless besides a loss of about 150 crore rupees every day. "The closure of textile processing units in Pali and Balotra has led to low demand of grey cloth in the market. The prices of grey cloth have come down to 3-4 rupees per meter less than the actual manufacturing cost in last three months while the prices of yarn remain the same. Under this situation the weavers cannot run their powerlooms", Aleem Faizee, Secretary of Malegaon Industries' & Manufacturers' Association (MIMA) said while talking to ummid.com.
Prices of cotton grey cloth started falling in February this year when the Rajasthan Pollution Board axed about 800 textile processing units and forced them to stop work accusing them of violating the norms. "However, situation worsened further when the markets opened after Eid break in July. This forced the weavers in Malegaon to bring the production to minimum", Faizee added. Likewise in Bhiwandi, tired of rising yarn prices and declining grey fabric cost, the weavers decided to stop production from August 16 to August 31. "More than 90% of the powerloom units in Bhiwandi are closed since Monday. The market situation is such that running powerloom units will be suicidal", ex MLA Rasheed Tahir Momin said. Worried by the closed powerlooms units in Bhiwandi and Malegaon, the labourers who migrated the two centres from Bihar, West Bengal and Uttar Pradesh are planning to go back home. "I came from Pratapgarh only a week ago after vacation. But I will be going back home because of closed powerloom units", Mohammad Shamim, a labourer, said. The closure of powerloom units in Bhiwandi and Malegaon is bound to impact textile business in Surat and other part of the country. Market watchers recall similar situation was also witnessed when Vajpayee was the prime minister of the country.
SOURCE: The Ummid
Facing mounting losses due to a slowdown in both domestic and export demand, spinning mills in India, the world’s largest yarn exporter, have started cutting down on production for the first time in five years to prop up prices, according to senior industry and trade executives. Most spinning mills, especially the small and mid-sized ones, in northern and southern India have decided to stop production for a day each week, while many in other parts of the country are reducing production to cater to only “need-based” sales.
Prem Malik, chairman of the Confederation Of Indian Textile Industry, said: “Chinese demand has slowed down drastically, as that country has been offloading cotton stocks from its own reserves for quite a while now, making locally-produced yarn very competitive, compared with Indian yarn. The yuan devaluation is making imports even more expensive.” What has made matter worse for the mills is the withdrawal of export incentives for yarn in the recently-announced foreign trade policy (FTP) for 2015-20. Consequently, yarn exports to countries, such as in Latin America, are also getting affected due to high shipment costs, Malik said. In such a situation, poor demand in the domestic market was just like the last nail in the coffin, which resulted in a piling up of stocks, he added. Effectively, 15-20% of production is going to be cut until the situation improves, said another senior industry executive. The country had produced 4054.59 million kg of yarn in the last fiscal, up from 3928.27 million kg a year before. In the first three months of the current fiscal, yarn output stood at 1045.11 million kg, up 5% from 992.29 million kg in the same period last fiscal, according to the textile ministry data. Domestic stocks of yarn, too, rose almost 4% as of June.
Despite such a liquidity crunch, the government is yet to clear subsidy claims of around Rs 4,500 crore for investments made under the flagship Technology Upgradation Fund Scheme (TUFS). Mills have been awaiting the release of subsidies worth R3,000 crore for more than three years now against investments made during the so-called black-out period (June 20, 2010 to April 27, 2011) as well as errors in reporting of the dole-out amount by banks to the textile commissioner, while claims worth Rs 1,500 crore are yet to be cleared for investments made during the last fiscal, according to the industry estimates. After a 33% spurt in the 2013-14 fiscal, India’s cotton yarn export registration has mostly fallen below the 100 million-kg mark a month from April 2014, as Chinese demand faltered. Since the capital-intensive spinning segment accounts for bulk of the investments under the TUFS, the non-payment of subsidy amount for earlier investments is taking a toll on the balance sheets of spinning mills. “In the absence of a level playing field due to higher rates of duties for Indian textile products in various major international markets, higher raw material cost, high cost of funding and high transaction cost, the industry is not in a position to achieve its potential growth rate,” said T Rajkumar, chairman of the Southern India Mills’ Association. Asking the centre to expedite free-trade agreements with China, the EU and other countries and create a level playing field for the Indian exporters, the industry has also sought a 3-5% incentive under the Merchant Export Incentivization Scheme as an interim relief until the FTAs are signed.
SOURCE: The Financial Express
The recent devaluation of the yuan has led to a weakness in the rupee against the dollar. There are concerns that if the depreciation intensified, then a rate cut by the Reserve Bank of India (RBI) in September may be delayed as the central bank may not be comfortable with the risk of capital flight looming large. RBI will review the mon-etary policy again on Sept-ember 29, and from the start of 2015, the repo rate or the rate at which banks borrow from the central bank has been cut by 75 basis points. However, monetary transmission has laged as banks have been reluctant to cut their lending rates. "It is not the yuan's depreciation, but the extent to which it will depreciate is ritical. If the pace of depre-ciation picks up, it will cre-ate a lot of volatility in financial markets and increase the risk of capital flight. In that case, no emerging market economy would like to reduce the interest rate," said Rupa Rege Nitsure, group chief economist, L&T Financial Services.
From the time of yuan's devaluation last week, the rupee has already weakened 2.27 per cent so far. It is currently near a level last seen two years ago. The rupee had ended at 65.32 per dollar on Thursday and today, the foreign exchange market was shut on the occasion of Parsi New Year. Currency experts are of the view that though RBI is sitting on a foreign exch-ange reserve position which can be termed comfort-able, there is probably more weakness in store for the rupee as India may follow a strategy of competitive devaluation. "A rate cut is in the offing in September, unless the rupee devalues way too much, beyond say 67 by then. The depreciation of the rupee till 66 per dollar is fine, but anything beyond that is problematic," said Anindya Banerjee, currency analyst, Kotak Securities. RBI's foreign exchange reserves fell $ 113.5 million for the week ending August 7 to $353.35 billion, shows data released last Friday.
In 2013, the rupee had touched an all-time low of 68.85 intra-day trades. Though it is agreed that the worst is behind us, the street is concerned that the US Fed may soon start hiking the interest rates. This would lead to an outflow of foreign funds from the emerging markets and India will not be an exception. However, the scenario on the inflation front is currently under control as Consumer Price Index (CPI) inflation eased to 3.78 per cent in July compared with 5.40 per cent a month ago.
SOURCE: The Business Standard
Rating agency Moody’s Investors Service today lowered India’s growth forecast to 7 per cent for 2015, from 7.5 per cent projected earlier, citing monsoon concerns and cautioned that further risks to growth stems from slow pace of reforms. “We have revised our GDP growth forecast down to around 7 per cent, in light of a drier than average monsoon although rainfall was not as low as feared at the start of the season,” Moody’s Investors Service said in its ‘Global Macro Outlook for 2015-16’. Saying that India’s growth outlook is resilient beyond short-term monsoon effects, Moody’s has retained the growth forecast for 2016 at 7.5 per cent.
Reform process
“One main risk to our forecast is that the pace of reforms slows significantly as consensus behind the need for reform weakens once the least controversial aspects of the government’s plan have been implemented,” Moody’s said. It said as a net importer of commodities, India’s growth outlook benefits from the fall in commodity prices over the past year. Also the country is “little affected” by demand from China and more generally slower global trade growth. Moody’s said economic activity will continue to strengthen on the back of a gradual implementation of reforms that foster domestic and foreign investment.
Consumption growth
Consumption growth will continue to be supported by large income gains as inflation has fallen to relatively low levels by the country’s past standards and favourable demographics. “Barring a large shock to commodity prices or food inflation, we think that the central bank’s inflation targets are achievable,” it added. “Maintaining inflation at lower levels than in the past will support real incomes and spending. As long as the central bank’s objective is credible, it will also foster investment by providing more visibility about future revenue growth and margins,” Moody’s said. It added that growth in 2015-16 will also be supported by an accommodative fiscal policy stance and the budget focuses on sustained economic growth as a driver of narrower deficits.
SOURCE: The Hindu Business Line
It is now India’s turn to emerge as the “factory of the world”, according to an article in Chinese official media, citing the economic downturn in China forcing companies to turn to India for manufacturing. “Recent years have seen an increasing number of discussions about the relationship between China and India, raising questions about whether it is a complementary or a competitive one. The Modi administration is also trying to clear obstacles within the country, such as relaxing restrictions over foreign investments and knocking down bureaucratic hurdles. All these efforts have smoothed out the connections between the Chinese companies and the Indian market, it added. “However, in the near future, bilateral economic relations won’t be as reciprocal as we might hope. As economic ties strengthen, frictions will increase. “Nonetheless, this is an unavoidable path for an emerging economy hoping to become the factory of the world. China has been there. Now it’s India’s turn,” it said. As China faces an economic downturn, the question of whether India will replace China as the factory of the world is being debated at length, especially when analysts predict India’s economic growth rate will surpass China’s in the coming years, the article said. “The real challenge facing both countries is how to turn away from rivalry and focus on their ability to engage in economic transformation via cooperation rather than competition,” it said.
SOURCE: The Financial Express
In August 2013, when the US Fed gave a time to phase out easy money policy, India figured in the pack of 'fragile five' emerging market currencies that could come under pressure. But, this time round, after the yuan devaluation, the rupee is not in the basket of 'troubled ten" currencies - a new term coined in the global currency market for units particularly vulnerable to the resetting of exchange rate by China. Though the rupee has dipped recently and could be let to slide slowly, its depreciation so far has been one of the lowest in EM. Indeed, some brokerages believe that the rupee is likely to outperform currencies in the EM universe. For instance, a Citigroup report says that India is less vulnerable to China's currency depreciation through direct channels, but the rupee may still weaken. Traders say global investors in the offshore market, who had built long positions in EM currencies, may further unwind, and this could weaken these currencies, including the rupee.
When the Indian rupee figured in Morgan Stanley's "Fragile Five" list nearly two years ago, it had plunged to a new low of 68.83 to a dollar. All those five currencies that were termed as 'fragile' were identified as the worst performers in 2013. But, since then, the fall of the Indian rupee has been limited to 5%, but many developing market currencies crashed by more than 20%. The Brazilian real and the South African rand, which were part of the 'fragile five', now figure in the 'troubled ten'.
SOURCE: The Economic Times
The government will soon come with a comprehensive model Bilateral Investment Treaty (BIT), which will form basis for fixing shortcomings in existing pacts and negotiations with different countries. Government had decided to come out with a new framework after several multinational firms invoked bilateral investment protection agreements. The model text would be used for renegotiating the BITs and would form basis for new investment protection treaties. As per the proposal, the model BIT may include provisions to limit power of tribunal to award monetary compensation to an aggrieved investor, sources said. The Finance Ministry will move a Cabinet note on the issue soon, they said.
An aggrieved investor as per the proposal would have to exhaust all local remedies before initiating international arbitration, they said adding, the changes are aimed at providing balanced investor protection within the overall framework of country's laws and regulations. The revised text would ensure non-discriminatory and national treatment to overseas investors. The model BIT is expected to exclude matters relating to government procurement, taxation, subsidies, compulsory licences and national security. It may also exclude the provisions under which investor were permitted to initiate dispute claim proceedings against the government. India has so far signed 83 Bilateral Trade and Promotion Agreements (BIPA), of which 72 are in force. Global telecom firms, which had lost their 2G licences following a Supreme Court judgement, have slapped notices on the government citing breach of bilateral investment protection pacts. Besides, companies like Vodafone and Nokia, which are tangled in tax dispute too had evoked the BIPA and sent notices to India.
SOURCE: The Economic Times
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 47.98 per barrel (bbl) on 18.08.2015. This was lower than the price of US$ 48.17 per bbl on previous publishing day of 17.08.2015.
In rupee terms, the price of Indian Basket decreased to Rs 3129.26 per bbl on 18.08.2015 as compared to Rs 3141.65 per bbl on 17.08.2015. Rupee closed at Rs 65.22 per US$ on 17.08.2015. The table below gives details in this regard:
|
Particulars |
Unit |
Price on August 18, 2015 (Previous trading day i.e. 17.08.2015) |
Pricing Fortnight for 16.08.2015 (July 30 to Aug 12, 2015) |
|
Crude Oil (Indian Basket) |
($/bbl) |
47.98 (48.17) |
50.68 |
|
(Rs/bbl |
3129.26 (3141.65) |
3243.52 |
|
|
Exchange Rate |
(Rs/$) |
65.22* |
64.00 |
SOURCE: PIB
The 14th International Textile Asia Exhibition will be held for the first time in Lahore, Pakistan from August 29 to 31, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has announced. PRGMEA is hosting the exhibition in collaboration with Ecommerce Gateway Pakistan. The Association has described it as a trade fair of Punjab's biggest B2B textile, garment, embroidery, digital printing machineries and chemical and allied service.
“PRGMEA is taking steps to boost export of value-added sector by bringing latest garment technology at door step and this activity is being done to facilitate the exporters of Faisalabad, Multan as well as Sialkot,” said PRGMEA's central chairman, Ijaz Khokhar The event will provide an effective platform for joint ventures and collaborations to the textile sector's SMEs, 80 per cent of which are located in Punjab, having no financial capacity to attend international exhibitions. The exhibition is going to provide them the best opportunity where more than 350 international brands from around 29 countries will display their products in more than 500 stalls. Around 210 foreign delegates are expected to participate in the exhibition. The local textile sector's whole chain has also been invited to attend this country's largest textile show. The exhibiting countries include: Austria, China, Czech Republic, France, Germany, India, Italy, Korea, Taiwan, Turkey, UK, USA etc. The Management of Apparel has also been invited to participate in the fair.
PRGMEA vice chairman Malik Naseer said that the International Textile Asia Trade Show is one of the most and enduring events to be held for the last 14th successive year but first time in Lahore. The event is being organized at the most opportune time when the government is looking forward to modernize and upgrade the textile sector of the country for better quality products and enhanced productivity. The E-commerce Gateway Pakistan president Dr. Khursheed Nizam said that the international Textile & Garment Machinery Show is the only UFI (Paris) Approved Event of the industry in South Asia, which provides enormous opportunities of learning, information sharing, mutual cooperation and combined projects to all the stakeholders in the most apt sector of Textile in Asia. In the run up to the exhibition, the Pakistani textile industry has been railing against the government to improve economic and bureaucratic conditions for the ease of doing profitable business.
SOURCE: Fibre2fashion
The third edition of Home&Tex, Turkey’s key home textile and decoration fair, organised by Istanbul Trade Fairs, an affiliate of CNR Holding, in co-operation with the Turkish Home Textiles Industrialists and Businessmens’ Association, will see more than 500 exhibitors present their latest collections. Hometex offers a wide range of high quality products such as baby & bedroom textiles, bathroom & kitchen textiles, carpet & floor coverings, upholstery & furnishing products as well as curtains & window fashion accessories. It is a specialist trade platform giving exhibitors and buyers of home textiles immediate access to markets in Turkey and beyond. Home&Tex hopes to attract visitors from Russia, the Middle East, Europe and North Africa. The event will be take place across 50,000 sqm of CNR Expo, Yesilkoy, from 28th-31st October.
SOURCE: Yarns&Fibers
Crude oil prices have further declined in the past two months following renewed projections of lower demand and rising production. Prices have almost corrected 30 per cent in the past two months. WTI crude oil is trading at its lowest level since March 2009, while Brent crude might hit fresh six-and-half-year lows, as analysts have started downgrading oil prices further. WTI crude is trading at a little below $42 for the last few days, a level last seen in March 2009. Christopher Wood, managing director and chief strategist of CLSA, said, “A break below $40 in the oil price is only a matter of time even if there is undoubtedly scope for a short-term bounce. This is because shale production is becoming ever more efficient, which is why the marginal cost of production keeps falling.” Wood said with US shale gas efficiency improving, it cannot be assumed that Saudi Arabia will ultimately win the battle for market share. "This also explains why a falling North American rig count has so far coincided with rising US oil production. Thus, the US oil rig count has declined by 58 per cent since peaking in October 2014, while the US crude oil production has risen by 6 per cent over the same period,” he said. Going by this, it is certain that Brent oil will also fall in line with WTI oil. Oil prices have fallen from their peak of over $100 in June 2014 due to competition between US shale gas producers and West Asian countries. Lower global growth along with rising production of crude oil has added to the woes.
A few days ago, Saudi Arabia said it was scaling down its oil production from record levels last month even as rival Organization of the Petroleum Exporting Countries (Opec) members helped push the group’s output to the highest level since 2012. Iraq and other members of Opec are expected to continue producing more oil. Analysts say the increase above 10 million barrels per day in recent months had been partly driven by a seasonal need to meet higher summer power demand and to build up stocks at new refineries in the country. Opec output — led by Saudi Arabia and Iraq — has risen this summer, adding to a global glut. Supply from US shale and other countries outside of Opec was proving to be more resilient than initially expected, the cartel said on Tuesday.Wood said the real action remains in the oil-led commodity market, where the Bloomberg Commodity Index is now at its lowest level since February 2002.
Natixis, another leading London-based commodity research house, has also downgraded oil further. Abhishek Deshpande, lead oil markets analyst, Natixis Commodities, believes the recent fall in oil prices was led by Chinese data of lower growth and removal of sanctions on Iran along with glut in oil. “Given the continued weakness in commodities markets and oil in particular due to a glut in global oil and oil products supply along with some weakness in China and expected strength in dollar, we have revised our oil price forecasts once again. As forward curve has already corrected itself to our last forecasts, we have reduced our oil price scenario down further in 2015 and 2016 for Brent to reflect our continued bearish view on oil,” he said. For WTI, Natixis scaled down the average price for 2015 to $47.8. The average so far this year has been $52.39. Similarly, for 2016, its forecasts are for WTI average of $41 and for Brent average of $45.
SOURCE: The Business Standard
The Trans-Pacific Partnership (TPP) agreement is necessary for Malaysia as it continuously seeks new and greater market access for its goods and services by creating a more liberalised and fair global trading environment. “FTAs (Free Trade Agreements) play a key role in regional integration. To ensure that Malaysia continues to gain market access internationally and remains an attractive location for foreign investment, we need to pursue bilateral and regional trading arrangements. “This is one of the critical reasons why our government is actively pursuing the TPP,” commented Datuk Wira Jalilah Baba, president of Malaysian International Chamber of Commerce and Industry (MICCI) and chairman of Crewstone International Sdn Bhd.
Despite its controversies, Jalilah viewed the TPP as an important initiative for Malaysia to expand its market access opportunities, enhance its competitive advantage, and build investor confidence that will serve to attract foreign investment into the country and build capacity through FTAs. “In addition to benefiting the Malaysian companies that export to our FTAs partner countries, TPP offers a greater advantage to Malaysia as it covers nearly 40 per cent of the global economy and includes 12 countries,” she outlined in a statement. “The TPP is expected to allow Malaysia to serve as a base of operations for foreign companies in non-TPP countries as well. As a member of TPP, Malaysia will also be able to participate as an important link in the whole regional supply chain.”
In the long run, the TPP is anticipated to bring benefits of lower cost of goods and more efficient production by taking advantage of the competition and economies of scale. “With the TPP, Malaysia will be able to go on the offensive and take advantage of new international markets. “We will also continue to be an integral part of the deepening economic integration taking place within the Asia Pacific region, and engage more tangibly with important trade partners such as the US, Canada, Mexico and Peru, with whom we currently do not have any structured framework or trade agreements. “Just like the recently implemented FTA with Australia, which has enabled Malaysia to enjoy duty-free access into the Australian market, the TPP will offer opportunities for seamless markets with preferential access far beyond our population, opening up regional and global investment opportunities,” she said.
The successful conclusion of the TPP is anticipated to open an unprecedented market of 793 million people, with a combined GDP of US$27.5 trillion – far surpassing the limited domestic market of 29.5 million people and a GDP of US$300 billion in Malaysia. Nevertheless, several sensitive and contentious issues remain on the table, including next- generation drugs, autos and dairy products. Jalilah stressed that these issues will be addressed in due course and the government, through the Ministry of International Trade and Industry (MITI), is doing its best to protect the best interest of all parties. “We commend MITI and its chief negotiators who continue to persevere and seek an optimal outcome for these ongoing trade talks. “A cost-benefit analysis of the TPP deal will be presented to the public and the Parliament once ready. This analysis will ensure that the cost of implementing the TPPA does not outweigh its benefits.” She added that a satisfactory conclusion of the TPP could pave the way for similar FTAs in future, such as the EU-Malaysia FTA. “The TPPA is representative of modern trade agreement thinking, and as such, Malaysia should not shy away from measuring itself against this yardstick. “Moving away from ‘developing nation’ towards ‘developed nation’ means relying less on preferences granted and more on competitive access to global markets – this is what the TPPA and future FTAs will bring.”
SOURCE: The Borneo Post Online
According to the report titled “Global Macro Outlook 2015-16: Risks to muted global growth from Chinese asset price deflation, US rate increase, and Greece's possible euro exit", the rating agency maintains its baseline forecast for G20 GDP growth at 2.7 per cent this year, rising to around 3 per cent in 2016, compared to 2.9 per cent in 2014. These 2015-16 growth forecasts are still below the G20's average growth rate before the financial crisis, and Moody's does not expect growth in the G20 to return to those pre-crisis averages within the next five years. "The recovery in the US and, to a lesser extent, the euro area and Japan, will be offset by the ongoing slowdown in China, low or negative growth in Latin America and only a gradual Russian recovery from its recession this year," said the report's author Marie Diron, senior vice president, Credit Policy. "A sharp or long-lasting correction in asset prices in China is one of the risk factors which could result in lower G20 growth than in our baseline forecasts." The main downside risks to Moody's Global Macro Outlook over the next two years relate to a possible further marked correction in Chinese equity and property prices, a disorderly response to the US Federal Reserve's anticipated policy tightening and a Greek exit from the euro area. All these risks would have a marked negative effect on the global economy compared with our current forecasts.
In China, Moody's maintains its baseline GDP growth forecast of 6.8 per cent this year and 6.5 per cent in 2016, before falling towards 6 per cent by the end of the decade. The recent stock market correction is unlikely to have a significant impact on China's GDP growth. The depreciation of the yuan so far will also not have any marked economic impact, the report said. Moody's forecast is that US growth will be at 2.4 per cent in 2015, before rising to 2.8 per cent in 2016. Robust job creation, high corporate profits, favourable financing conditions and pent-up demand all point to higher GDP growth. Moody's euro area forecast is for growth of 1.5 per cent in both 2015 and 2016. The weaker euro and lower oil prices have given a boost to the region's economy. However, there is no evidence from either increased investment, labour productivity or faster than usual employment growth that structural reforms have markedly lifted the region's growth potential yet.
Japan is one of the few countries that has seen its growth forecast revised up by Moody's this quarter. However, at the global level, this is offset by sizeable downward revisions for countries such as Brazil, Indonesia, Korea and Mexico in 2015-16. The gradual global economic recovery has an impact on oil markets. The increase in world oil supply continues to outpace demand and Moody's has revised down its oil price assumptions. Moody's now expects the Brent price to average $57 a barrel in 2016, only a little higher than the 2015 average of $55.
SOURCE: Fibre2fashion
