Japan trade deficit quadruples; GCC nations to grow at 4.4%; What Putin is costing Russia

1 Japan trade deficit quadruples (BBC) Japan's trade deficit quadrupled in March as export growth slowed and energy imports continued to rise. A weak Japanese currency, which pushed up the cost of imports, also contributed to the widening gap. The deficit rose to 1.45 trillion yen ($14bn), up from 356.9bn yen during the same month a year ago. Japan's energy imports have been rising after it shut all its nuclear reactors in the aftermath of the earthquake and tsunami in 2011. 

Imports of Liquefied Petroleum Gas (LPG) rose more than 8% in March, compared to the same month last year. Meanwhile, imports of Liquefied Natural Gas (LNG) rose nearly 4%. And Japan is having to pay more for those imports after a series of aggressive policy moves aimed at spurring economic growth - including a huge boost to the country's money supply - have weakened the yen sharply. The Japanese currency fell nearly 10% against the US dollar between March 2013 and March this year.

http://www.bbc.com/news/business-27099942

2 GCC nations to grow at 4.4% (Abdul Basit in Khaleej Times) Economic growth in the Gulf Cooperation Council (GCC) region will remain largely influenced by oil prices and supply dynamics in the oil industry. Gulf economies are expected to grow 4.4 per cent in 2014, Saudi-based Alkhabeer Capital said in its latest report.

“Large surpluses and stable debt ratios should help the GCC withstand a temporary decline in oil prices, effective diversification remains the only solution in the long term,” Al Khabeer explained in its ‘Economic Review of Q1.’ GCC governments are targeting greater diversification so that the non-oil private sector starts to play a more significant role in supporting the economy, according to the Q1 review.

Recently announced budget estimates by the GCC for 2014 suggest a growing emphasis on investing in sectors such as education, healthcare and infrastructure. These measures are aimed to improve the local human capital and initiate development of high value-added activities in the long run, it said. The International Monetary Fund (IMF) expects UAE’s real GDP growth to remain steady at 4.5 per cent, unchanged from the previous year, supported by a number of mega projects in the real estate sector and Dubai’s hosting of the Expo 2020 exhibition.

Al Khabeer was cautiously optimistic about the world economy. “Post the first quarter of 2014, while we remain optimistic about the global economic recovery, we are watchful of the risks, including the events unfolding in Ukraine,” it said.

http://khaleejtimes.com/biz/inside.asp?xfile=/data/uaebusiness/2014/April/uaebusiness_April320.xml&section=uaebusiness

3 What Putin is costing Russia (Ilan Berman in The Wall Street Journal) Vladimir Putin’s Ukrainian adventure seems to be costing Russia quite a lot. New statistics from the Central Bank of Russia indicate that almost $51 billion in capital exited the country in the first quarter of 2014. The exodus, says financial website Quartz.com, is largely the result of investor jitters over Russia's intervention in Ukraine and subsequent annexation of Crimea.

While Russia can mitigate some of the damage because of its extensive foreign-currency reserves—estimated at more than $400 billion—the new Central Bank statistics signal that worse is still to come. Russia's economic development ministry has downgraded the country's forecast to less than 1% growth this year; an earlier estimate had been 2.5%. The World Bank projects that the Russian economy could shrink nearly 2% in 2014. That would cost Russia in the neighborhood of $30 billion in lost economic output.

Meanwhile, the Russian government's bid to pressure Ukraine could end up backfiring. The state-controlled natural-gas giant, Gazprom recently jacked up the price of gas to Ukraine by 80% and levied an $11.4 billion bill on Kiev for previously discounted energy sales. But observers say that the price hike could lead to a reduction in purchases as Kiev diversifies away from Russia toward friendlier European suppliers.

Moscow's international standing is becoming increasingly tenuous. Russia has already been ejected from the G-8 and its path to accession in the Organization for Economic Cooperation and Development has been halted, at least temporarily. In the latest development, the Parliamentary Assembly of the Council of Europe stripped Russia of its voting rights in protest over its interference in Ukraine.

The situation could become even direr if Western economic pressure, which is still minimal, is ratcheted up. President Putin is currently riding a surge of popularity at home, propelled in no small measure by his assertive moves in Ukraine. But the longer the crisis over Ukraine lasts, the higher the economic costs to Russia are likely to be.

http://online.wsj.com/news/articles/SB10001424052702303663604579503433988345564?mod=trending_now_4