Northern Country

How globalization changes capitalism, the economy and politics

Posts Tagged ‘OECD

Austria – is there an emergency plan for Eastern Europe?

leave a comment »

Back in January this year experts from the EZB, IMF, EBRD and Austrian government together with representatives from the largest banks in the country met almost secretly to what has been called ‘Gedankenaustausch’. Officials denied it was a crisis meeting but rather a swapping of ideas about how best to meet the challenges threatening the stability of the country coming form Eastern Europe.

Noble laureate and US economist Krugman even claimed that the country is at severe risk of default because of its off the charts exposure to Eastern Europe. Krugman: “So what I said …..— that after those two (Iceland and Ireland), it’s (Austria) probably the advanced country at most risk from the financial crisis — shouldn’t even be controversial.”

image

The professor does not even deem it controversial and yet Austrian officials both from politics and financial industry maintain the crisis is manageable and not as bad as some might fear.  Walter Rothensteiner CEO of Raiffeisen Zentralbank (RZB), one of Austrian’s biggest banks, does not agree with international organizations like the IMF that his bank will need more government funds in 2010. Of course those funds are expensive. So far RZB has requested 2.5 billion euro from the government (that’s almost 30 percent of core capital!). Rothensteiner refuses to make any projections about the magnitude of possible NPLs in his firm.

Recently economist Paul Hilbers, head of IMF’s monetary and financial systems department, downplayed the threat coming form Eastern Europe. “We don’t see a threatening default scenario. Austrian banks are facing a difficult time in Eastern Europe, but I wouldn’t call them threatened," Hilbers said.

Today the OECD again warned of more risks to the financial stability of the country through its heavy Eastern European exposure. They recommend to the Austrian government to prepare emergency plans in case the financial and economic crisis should get worse. In addition OECD experts suggest further cross-boarder initiatives to handle the crisis.

There are no official emergency plans known. Maybe they do exist though. Even the OECD admits so far Austria has weathered the storm better than others, but I sincerely hope that politicians and experts do not turn off electricity entirely when they all go on vacation in the coming months. Better yet hopefully there will be no emergency at all, at least not in the months of July and August.

Advertisements

Written by Alfred

2. July 2009 at 1:15 pm

Update on deepest global recession in over 60 years

leave a comment »

Yesterday US president Obama for the first time offered a passionate defense of Ben Bernanke, chairman of the Federal Reserve. Bernanke did a fine job and performed well during the crisis. This support is supposed to strengthen Obama’s position on reform and oversight of the financial-services industry. He plans to vest almost unlimited power with Bernanke and the Federal Reserve and this has drawn some criticism. Many blame the Fed for the current financial and economic crisis and despite drastic actions by the Fed and other central banks around the world, global growth has continued to contract. Here is an update on the most recent forecast for global growth and despite some improvement it ain’t looking good.

Weltbank Kahlschlag bei Euro-Zone-Prognose:

World Bank lowers Euro-zone GDP growth forecast dramatically from minus 2.7 to minus 4.5 percent GDP growth for 2009. US GDP will also contract by 3 percent, worse than the previous 2.4, and Japan by 6.8 percent versus 4.3 percent contraction of GDP in 2009. According to WB the recovery in 2010 will also be more tepid than previously thought. A modest better growth uptick is expected for China, Russia and India.

Weltwirtschaft erholt sich laut IWF schneller:

According to the International Monetary Fund (IMF) the recovery from the global recession will be stronger than previously thought but deleveraging of private and public households, slow credit growth, unemployment and shrinking private wealth will slow down recovery. For 2009 global growth will contract by 1.3 percent according to the IMF.

World Bank cuts 2009 global growth forecast:

Global trade is expected to plunge by 9.7 percent this year, while total gross domestic product for high-income countries contracts by 4.2 percent, the bank said. Economic growth in developing countries should slow to 1.2 percent — but excluding relatively strong China and India, developing economies will contract by 1.6 percent. The WB sees a projected recovery beginning at the end of 2009 but expects it to be much less vigorous than normal.

Global recession nearing bottom, OECD says:

The deepest global recession in over 60 years is close to bottoming out, but recovery will be weak unless governments do more to remove uncertainty over banks’ balance sheets, the Organization for Economic Cooperation and Development (OECD) said Wednesday. The economy of OECD countries will shrink by 4.1 percent in 2009, slightly better than a 4.3 percent from the previous forecast. But the recovery "is likely to be both weak and fragile for some time” . The OECD forecasts return to an average of 0.7 percent growth across its member countries in 2010. In the US recovery "could be uncharacteristically weak and insufficient" .

 WachstumsprognosenJun2009

Written by Alfred

24. June 2009 at 10:11 pm