22nd July 2022: Yesterday closed orders given +3.818%; The surplus of the Russian economy is increasing; Germany enters a period of negative economic growth; The private sector in the eurozone is in decline
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The surplus of the Russian economy is increasing
The Russian Federation’s Central Bank lowered interest rates below where they were before Russia’s invasion of Ukraine, resulting in the monetary policy loosening more than anticipated. On Friday, policymakers brought the benchmark rate down from 9.5 percent to 8 percent, hinting that they may contemplate further reductions later in the year. The amount of the sixth reduction in a row was more significant than any economists surveyed by Bloomberg had anticipated. Exports into Russia have almost completely dried up, contributing to a current account surplus reaching a record high. The projection that the central bank has made for the current-account surplus for this year has increased to $243 billion. It forecasts that exports will reach $593 billion in 2022, which would be the highest amount in Russian history for that particular metric.
Germany enters a period of negative economic growth
As a result of inflation’s strain on companies and individuals, as well as the confidence crisis caused by the conflict in Ukraine, Germany’s economy has contracted for the first time this year. In July, a measure of activity in the private sector developed by S&P Global reached its lowest point in the past 25 months. The data lend credence to the hypothesis that the second half of 2022 will see the largest economy in Europe enter a period of negative economic growth.
The private sector in the eurozone is in decline
The private sector in the Eurozone experiences contraction for the first time since the pandemic lockdowns in early 2021. In July, a poll conducted by S&P Global of purchasing managers reached its lowest level in 17 months. The slowdown was brought on by a decreasing production among manufacturers and a boom in the service sector that came dangerously close to a halt. Christine Lagarde, the president of the European Central Bank (ECB), has stated that it is critical to stop people from growing accustomed to the idea of rising costs. According to a study published quarterly by the ECB, the projections of growth for the coming year have been revised downward to 1.5 percent from 2.3 percent.
The value of European bonds increased, with gains led by a rise in the price of short-term German debt. The yield on the two-year bond dropped 22 basis points, poised to be the most significant drop in a month.
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