Rolling business and financial news, as the International Monetary Fund cuts its growth forecasts again, citing geopolitics and the eurozone as key risksIMF cuts growth forecasts Summary: Germany in recession? 4.02pm BST Over in Greece, the campaign by cleaning ladies fired last year as part of the governments deregulation of labour laws continues. Helena Smith reports:Despite the rain and their ongoing court battles with the Greek state, the women who have become the emblems of austeritys injustice are in robust mood. We are not going to back down and have lots more surprises in store, said Despoina Kostopoulou, the cleaners unofficial spokeswoman. We wont relent until we are reinstated in the jobs that we wrongly lost. The women said they had derived great strength and courage from a letter of solidarity the British film director Ken Loach had sent them on hearing of their plight.I have heard of your situation from friends in England. What a story! Your strength and determination to fight for real jobs with fair wages is inspiring. We have many stories like yours here, as Im sure you know. The constant pressure to privatise our public services is destroying the services and bringing poverty and insecurity to working people. The European Union and big corporations, supported by the politicians, are formidable enemies. But you too are formidable!We need to support each other, as you say. Paul Laverty, who writes our film scripts, including Bread & Roses, will be in Athens at the end of October for a couple of days (25 27th Oct). He may have a busy schedule at the film festival then, but he hopes he can meet with you then. 3.38pm BST Back with the IMF World Economic Outlook, TUC General Secretary Frances OGrady alights on the funds comments on investment for growth, saying:The IMFs research shows why austerity is failing across Europe and we have the slowest recovery from a crash on record. Waiting for growth to turn up is not enough, we need concerted government action to improve living standards in both Britain and our EU neighbours through investment in jobs, infrastructure, skills and wage packets. Without such action living standards will fail to recover. And complacent governments seem to want to go back to pre-crash business as usual, despite the worrying signs we can see already of house prices surging, an unreformed finance sector and household debts rising again. Only public investment and a strong industrial policy will give us a rebalanced economy that can deliver for all. 3.17pm BST Commodities giant Glencore has just released a statement saying it is no longer actively considering a merger with Rio Tinto.It comes a day after Bloomberg reported that Glencore was considering a tie-up in 2015, prompting Rio to say it had rejected the deal.Glencore announces that in July 2014 it made an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies. Rio Tinto responded that it was not interested in pursuing these discussions.Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto.Mulling? RT @FinancialTimes: .@fastFT: Glencore not "actively considering" Rio Tinto deal http://t.co/CtWXDdToup 3.03pm BST Just in.... UK growth slowed to 0.7% in the third quarter of this year, from 0.9% in the April-June quarter.Thats according to the National Institute of Economic and Social Researchs monthly estimate.Growth rates move around from quarter to quarter. We shouldnt be surprised to see growth moderate somewhat from the very robust rate in the preceding quarter. Its a story of continuing economic recovery. 3.01pm BST The news that the IMF had cut its growth forecast, added to this mornings tumble in German industrial activity, send shares falling on Wall Street.The Dow Jones fell 135 points in early trading.Markets Now » Dow falls 130 points, S&P loses 15 and Nasdaq sheds 36. http://t.co/PZZClHYrs9 pic.twitter.com/ebIYX3xEXx 2.50pm BST And finally, a question about American monetary policy -- when does the IMF think US interest rates will rise, and what impact will that have on the rest of the world?Gian Maria Milesi-Ferretti, IMF deputy director, says that the IMF expects the US recovery will continue this year and in 2015. 2.44pm BST What is the main priority for Japan in the next 6 to 12 months?The challenge that Japan has is very clear, Blanchard replies. They cannot let their debt/gdp levels rise, so they need fiscal consolidation. 2.42pm BST What does the IMF think of the plan, from the EUs new president Jean-Claude Juncker, for a major 300bn investment plan?Infrastructure investment in Europe is a great idea, Olivier Blanchard says, as many countries need better infrastructure and there are many people out work. 2.40pm BST How can Spain avoid deflation?Blanchard replies that the IMF is relieved that the Spanish economy is achieving growth, although it could be stronger, and it hopes that Spain will avoid full-blown deflation. 2.39pm BST The press conference turns to low-income countries sub-Sahara Africa; whats the IMFs view for them?Rupa Duttagupta, IMF deputy division chief, replies the the IMF expects another year of strong growth, over 5%, in the region. 2.33pm BST Whats does the IMF think about the European Central Banks plan to buy asset-backed securities (bundles of loans to small firms)? Chief economist Olivier Blanchard says:We believe it can make a difference. 2.29pm BST Another question on Ukraine.The IMF hopes that there will be an easing of tensions soon, that would allow a bounceback next year. 2.27pm BST For the first time in ages the IMF has left its forecasts for UK economic growth unchanged. Once bitten...? 2.27pm BST What is that IMFs view of the Egyptian economy?Not much change since April, its still a difficult situation. 2.25pm BST What is the IMFs view of the impact of the Ukraine crisis on Russias economy?The sanctions have made a difficult situation worse, says the IMFs Thomas Helbling. Looking forward, we dont expect any fast change on that situation to make Russia a more attractive place to invest. 2.22pm BST Olivier Blanchard is taking questions now.Guardian economics editor Larry Elliott asks whether the IMF believes the world economy is stuck in a secular stagnation, or is it simply paying the price for borrowing growth from the future in the run-up to the crisis. 2.19pm BST Olivier Blanchard is identifying three key risks:1) the search for yield in the financial markets, after years of low interest rates, may have stoked up risks for the future. 2.17pm BST The IMF has cut its forecast for emerging market economies. Blanchard says:For emerging market economies as a whole, potential growth is now forecast to be 1.5% lower than it was in 2011. 2.16pm BST Blanchard says that while Japans economy s growing, its high public debt and very low potential growth rate is a major macroeconomic and fiscal challenges.Japans debt/GDP ratio is now over 200%, so very hard to reduce without strong growth 2.13pm BST Over in Washington, IMF chief economist Olivier Blanchard is presenting the World Economic Outlook now (live feed here).Blanchard says that the headline estimate for global growth disguises the fact that some countries have recovered or nearly recovered. But others are still struggling. Among advanced countries, the United States and the United Kingdom in particular are leaving the financial crisis behind and achieving decent growth. Even for them however, potential growth is lower than it was in the early 2000s. Growth in the euro area nearly stalled earlier this year, even in the core. While this reflects in part temporary factors, both legacies, primarily in the south, and low potential growth, nearly everywhere, are playing a role in slowing down the recovery..... 2.09pm BST The new World Economic Outlook is packed with charts - my colleague Julia Kollewe has pulled together some important ones, here: 2.08pm BST The IMF is also warning that the world economy might never return to the pace of expansion seen before the financial crisis.From Washington, economics editor Larry Elliott writes:In its flagship half-yearly World Economic Outlook, the Fund said the failure of countries to recover strongly from the worst recession of the post-war era meant there was a risk of stagnation or persistently weak activity.The IMF said it expected global growth to be 3.3% in 2014, 0.4 points lower than it was predicting in the April WEO and 0.1 points down on interim forecasts made in July. 2.06pm BST The IMF also reckons that the UK will outperform the rest of Europe, with 3.2% in 2014, dropping to 2.7% in 2015.IMF expects UK to remain on top of G7 this year, with growth of 3.2pc despite "weak and uneven" global recovery. pic.twitter.com/DuSWCeghvk 2.00pm BST Breaking News: The International Monetary Fund has cut its growth forecasts, and warned that the world economy might never return to the pace of expansion seen before the financial crisis.The IMF now expects world growth to be 3.3% in 2014, down 0.1% from its July forecast, and 3.8% in 2015, down 0.2% from three month ago.Financial markets have been optimistic, with higher equity prices, compressed spreads, and very low volatility. However, this has not translated into a pickup in investment, whichparticularly in advanced economieshas remained subdued. And there are concerns that markets are underpricing risk, not fully internalizing the uncertainties surrounding the macroeconomic outlook and their implications for the pace of withdrawal of monetary stimulus in some major advanced economies. 1.51pm BST The IMF will hold a press conference conference to discuss its new world economic outlook at 2pm BST (9am in Washington).Its being streamed live, here (right-click to open in a new tab). 1.46pm BST Heads-up..... in 15 minutes time the International Monetary Fund will release its latest World Economic Outlook, over in Washington.Brace yourselves for new growth forecasts, charts, predictions on the state of the world economy..... 1.42pm BST Ouch. Fizz purveyor SodaStream has warned that revenues in the third quarter are below expectations, due to weaker-than-expected demand in the US. CEO Daniel Birnbaum didnt sweeten the pill, admitting that:We are very disappointed in our recent performance. 1.29pm BST Elsewhere in the Square Mile, Bloomberg is reporting that Dutch financial group Rabobank has suspended two London-based foreign exchange traders, after an internal investigation into their dealings. 1.22pm BST New rules that could see senior bankers jailed appear to have prompted two senior executives at HSBCs UK arm to leave.Reuters has the story:Two directors of HSBCs British business are set to leave the bank because they are unhappy with new rules that can result in jail sentences for senior bankers, a source familiar with the matter said.Alan Thomson, a member of the audit and risk committees of HSBC Bank Plc, has tendered his resignation from the bank and John Trueman, the deputy chairman of HSBC Bank Plc, is on the verge of resigning, the source said. 1.17pm BST Bob Rice, managing partner at New York-based Tangent Capital, reckons the slump in German industrial production is tied in with the weak inflation across Europe (which creates less demand for new goods)Ugly chart of German Industrial Production, via Quartz. EZ deflation drums getting pretty loud. pic.twitter.com/zS8Tzqy7HF 12.06pm BST This mornings weak German industrial data is the latest in a series of worrying signals. As this chart shows, the monthly PMI reports (which measure activity in the sector) have also shown a slowdown in recent months.Recession worries in #Germany as #manufacturing falls at sharpest rate since financial crisis http://t.co/aAfSbGjhHq pic.twitter.com/zQeCHSCStV 12.00pm BST Time to catch-up.Economists fear that Germany is sliding into recession, after industrial production across Europes largest economy tumbled by an alarming 4.0% in August, compared with July.The trend is pointing down, with the German economy in the third quarter likely to have stagnated at best.EUR continuing lower .... liquidity continuing to be poor.UK manufacturing is entering a soft patch as the fall-out from events in Ukraine spreads. Ukraine and Russia are of little direct importance to UK exporters. But the manufacturing cycle is highly integrated across countries. That means the decline in business confidence and German manufacturing output triggered by Russias aggression in Eastern Ukraine will continue to spread to the UK over the second half of the year. 11.12am BST The slowdown in UK manufacturing growth in August (details) hasnt helped the sentiment in the financial markets.All Europes main stock indices are in the red, as traders absorb the warning that Germany could be falling into recession.Wall Street is eyeing a weaker start to the days trade, both off the back of this lead from Asia but also given what appears to be a deteriorating geopolitical situation. The Ebola crisis continues to spread, whilst the fact Islamic State is now active on the Syrian/Turkish border is also significant cause for concern. 10.41am BST In other news this morning, Tesco has suspended its fifth executive as the investigation into its £250m profit mis-statement continues.Its understood to be group commercial director Kevin Grace. 10.18am BST My colleague Simon Bowers tweets:Breaking: A senior banker from leading UK bank pleads guilty to libor fixing conspiracy charge brought by SFO. Not named for legal reasons 10.12am BST Mike Rigby, head of manufacturing at Barclays, warns that the UK factory recovery is fragile:The slowdown in growth levels should not mask the reality that the manufacturing sector continues to grow although at a far more restrained level than we witnessed in the first half of the year. However, although there is still an optimistic outlook amongst manufacturers helped by easing price pressures in the sector, there is a fragility to the recovery which needs a powerful shot in the arm from both a boost in export orders as well as more investment in new product development and process enhancements. 10.10am BST Britains factory sector appears to have lost momentum, says Howard Archer of IHS Global Insight, following the meagre 0.1% rise in manufacturing output in August.Geopolitics, and the troubles in Europe, are to blame, he reckons:Weak Eurozone activity is clearly having a limiting impact on foreign demand for UK manufacturing goods.The recent strength of the pound has not helped UK manufacturing exports. In addition, it is possible that current heightened geopolitical tensions and the weakness in the Eurozone is increasing business caution and causing some orders to be delayed or even cancelled. 9.58am BST And this chart, also from todays UK production report, shows how industrial output in all major economies is still smaller than before the financial crisis began. 9.50am BST This chart shows how Britains industrial sector was hit hard by the great recession: 9.40am BST Here we go.... UK factory output was flat in August, down from 0.5% growth the previous month.Its another sign that global manufacturing slowed over the summer; but also rather better than Germanys 4% slump. 9.29am BST European stock markets have fallen following todays weak German factory data.The German DAX and French CAC are both down around 0.7%, with the FTSE 100 down 35 points or -0.5% (despite mining rallying). 9.23am BST OK, its nearly time to find out how Britains factories fared in August.The UK industrial output data is due at 9.30am BST, and will show if manufacturers here shared Germanys struggles. 9.20am BST Phillip Inman, The Guardians economics correspondent, reminds us that Germany has already rebuffed calls to increase government investment spending to boost the economy and drive growth in the eurozone.Inman says: Last week the International Monetary Fund (IMF) singled out Berlin for falling behind on infrastructure spending in a report that argued well targeted investments can pay back three times the initial cost.US Treasury secretary Jack Lew has also urged Germany to lead the eurozone out of its current morass with extra spending, especially as the government has boasted of its budget surplus.But finance minister Wolfgang Schäuble has consistently rebuffed these calls, rejecting Keynesian policies to boost higher public spending in Germany and elsewhere in Europe in favour of painful structural reforms. 9.18am BST More reaction...German industrial production shocks with biggest fall since 2009 - down by 4%. Long the engine of Europe's growth, now looking v weak.This is becoming a train wreck - German Industrial Production Plunges (via @BusInsiderAU) http://t.co/OdNAodNkWI 8.57am BST You can see this mornings alarming Germanys industrial output data here, on the Destatis website. It explains how the 4% slide in production was driven by an 8.8% drop in the manufacturer of capital goods (big-ticket items like machinery and cars). 8.49am BST Germany isnt alone.... New data from the Czech Republic shows that its factory production also fell in August.Czech industrial output shrank by 3.6% month-on-month in August, and was 5.2% lower than the year before. Car production was down by 13.4% year-on-year. 8.35am BST German industrial production dropped sharply in August, weighed down by falling manufacturing and construction output 8.27am BST Analysts at Berenberg bank have warned that the the 4% tumble in German industrial output in August may indicate that Europes largest economy is being dragged into recessionThat echoes INGs warning earlier this morning.Even if the decline in business confidence triggered by Russias aggression in Eastern Ukraine were to end in the coming months, we cannot even rule out a mild recession on the back of this data.A significant rebound in manufacturing, and thus investment, is unlikely to come through before early 2015. 8.17am BST In the City, shares in Rio Tinto soared by over 5% in early trading, following the news that it rejected a takeover approach from rival miner Glencore in August. Shares in Anglo American, another mining giant, are up 2% as investors anticipate an outbreak of takeover activity in the sector.Rio Tinto's shares just jumped 6% on news of Glencore's interest in a merger. That's Rio's biggest jump in 2 months pic.twitter.com/cB3svPjmbS 8.11am BST Looking at the detail of the German industrial output data.... production of new cars slumped by over 25% month-on-month in August.German IP - motor vehicles. #oneoffornot pic.twitter.com/fiMnwZ7y3y 7.56am BST Monthly factory output can be volatile. But as this chart shows, Germanys factory production had been bobbing around between +2% and -2% for the last couple of years, until August....Chart: Really ugly drop in German industrial production (m/m) - pic.twitter.com/WEXSkMjrLB 7.51am BST The euro has lost ground since the German industrial output data was released; down 0.2% against the US dollar at $1.2624. 7.47am BST Analysts are stunned by the 4% slump in German industrial production in August.Carsten Brzeski of ING says that geopolitical tensions, and the summer slowdown, proved a dangerous combination: Such a shocking number normally leads to two possible reactions: either an outcry of shock, or just denying the numbers due to monthly volatility or one-offs. Looking at the German numbers, the truth is probably somewhere in the middle. The sharp drop in August could at least be partly driven by the vacation period. However, the drop is too strong to explain it by one-offs. Looking beyond the third quarter, the German industry is looking into a more difficult future.The safety net of inventories and orders at hand has narrowed in recent months. Inventory build-up combined with dropping new orders does not bode well for industrial production in the fourth quarter.Another shocker. German IP drops by 4% MoM in August.OUCH. German IP down by 4.0% MoM in August. High volatility due to holiday in particular, but still. #DasTutWehGerman IP now down by 1.1% in Q3 (after -1.5% QoQ in Q2). Huge jump required in Sept. pic.twitter.com/I4RTuRWclxGrim factory orders yesterday, grim industrial production today - German economy definitely slowing. 7.39am BST Serious news out of Germany this morning -- industrial output across Europes economic powerhouse has tumbled at a pace not seen in five and a half-years.German industrial output fell by 4.0% month-on-month in August, according to data just released by the Economy Ministry. Industrial production is currently going through a weak phase ...but the current decline is exacerbated by holiday effects.All in all, one should expect weak production for the third quarter as a whole."Drops most since 2009" is the new black. 7.34am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, business and the eurozone.Todays big story will be the International Monetay Funds new World Economic Outlook, released at 2pm BST (or 9am Washington).Australia's central bank leaves interest rates on hold for the 13th-straight period, hinting it would stay at record low 2.5% for some time Continue reading...
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