Review of the world economy, January 2014

01 Mar 2014

In January 2014, the growth rates of the world economy continued to remain moderate. The growth rates of industrial production were not high in the USA. At the same time, economic activity of the private sector of Eurozone countries began to recover. On world goods markets, prices for basic raw materials went down due to an augmentation of supply volumes.

In January 2014, the global composite index JPMorgan PMI1 increased, totaling 53.9 versus 53.3 in December 2013. The growth rates of both industrial production and service industry accelerated.

In January 2014, the economic growth rates of the USA decelerated. The year on year growth rates of industrial production diminished to 2.9% as compared to 3.7% in December 2013 chiefly at the expense of a decline in manufacturing due to bad weather conditions in a number of regions of the USA.

Dynamics of industrial production of some countries

(year on year change)

A decline in industrial output was attended by worsening of the situation on the internal market. In January 2014, the growth rates of the retail trade turnover slowed down to 1.9% versus 4.1% in December 2013, which was caused by a reduction in car sales. On the labor market, the situation improved somewhat. In January 2014, there were created 129 thousand of new jobs as compared to 84 thousand in December 2013. The unemployment rate went down to 6.6%. The annual consumer inflation remained almost at the level of the previous month (1.6%).

In January 2014, the majority of Eurozone countries showed indicators of the economic growth recovery. Some improvement was observed in the private economy sector, which was proved by increasing business activity index to its highest level from the middle of 2011.

CPI dynamics of some countries

(year on year change)

 The domestic market was characterized by an augmentation of the retail trade turnover, up by 1.3% versus «minus» 0.4% in December 2013 (year on year). But, on the labor market, the situation remained difficult; the unemployment rate remained high (in January 2014, 12.0%). Inflationary processes continued to slow down.

Consumer inflation remained at the level of the previous month, totaling 0.8% chiefly at the expense of a decrease in prices for electric power.

In January 2014, a deceleration of the economic growth continued in China. The government of the country started to make new reforms in order to intensify new movers of the economic growth. Production activity in the industrial sector decelerated; in particular, there was observed a slump on the car market.

Inflationary processes were restrained against the backdrop of the New Year holiday. In January 2014, the annual consumer inflation remained at the level of the previous month (2.5%) at the expense of a reduction in prices for foodstuffs.

In January 2014, in Russia, the economic growth continued to slow down, being attended by both fiscal consolidation and a decline in consumer demand. The situation in the real economy sector worsened. In January 2014, the year on year growth rates of industrial production went down to «minus» 0.2% in January 2014 versus 0.4% in December 2013 chiefly at the expense of a decrease in production of energy carriers and production of manufacturing industry. The home market dynamics slowed down. In January 2014, the year on year growth rates of the retail trade turnover went down to 2.4% as against 3.8% in December 2013. The unemployment rate remained at the level of the previous month, making up 5.6%. In January 2014, the annual consumer inflation diminished to 6.1% versus 6.5% in December 2013, chiefly at the expense of decelerating rise in prices for foodstuffs.

Goods markets

In January 2014, there was observed a decline in prices for main commodity groups on world goods markets. The general index of prices for raw materials, which is estimated by the IMF, decreased by 2.1% to 180.4 versus 184.3 in December 2013; the decline was chiefly at the expense of a reduction in prices for energy carriers and metals.

Prices for oil went down in the expectation of an increase in volumes of oil supply by the OPEC as well as owing to the effect of the contract between Iran and world countries providing for exemption from sanctions, in particular, abolition of compulsory insurance when transporting oil. In January 2014, the price of 1 barrel of the Brent UK oil went down by 2.7% to USD 107.6, and the general index of prices for energy carriers was reduced by 5.2 p.p. to 189.1.

In January 2014, prices for basic metals declined at the expense of a decrease in demand for industrial metals from developing countries. Within the reporting month, the index of prices for industrial metals went down by 2.7 p.p. to 176.4.

In January 2014, the index of prices for foodstuffs diminished by 1.8 p.p. to 170.9 chiefly at the expense of a decline in world prices for both grain crops and vegetable oils against the backdrop of expectations of rich harvests in the new marketing year. Within the reporting month, the price for wheat went down by 5.5% to USD 275.5 per ton.

Dynamics of indices of foodstuffs, metals, and energy carriers

Dynamics of prices for oil and wheet in 2011 - 2014

Source: Bulletin of the National Bank of Ukraine

Back to: