Revista-E

Washington (Revista E) - In a new report, the IMF says credit rating downgrades can set off destabilizing knock-on effects on markets. In this interview, the IMF’s John Kiff explains why ratings reliance should be reduced.

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• The number of destroyed working places has been of 216.000 in the month I shrivel.

N.Y. (Agencies) - The rate of unemployment in USA has reached 9,7 %, a worse information of the foreseen one for the analysts of Reuters who were waiting for a percentage two tenths minor, of 9,5 %. In addition, the number of destroyed working places has been of 216.000 in the month in August, I date one that it  has surprised positively since it is a question of the minor decrease from August, 2008.

It is necessary to emphasize, that in case the rate of unemployment should reach 10 % it should realize, again, the tes of  stress to the great American banking.

Since it began the recession in December, 2007, the economy of USA has had a net loss of 6,9 million working places. The number of unemployed, in the same period, has grown in 7,4 millions and adds nowadays 14,9 millions of persons.

Frankfurt - The European Central Bank is expected to hold its key interest rate at a record low for the fourth straight month and would continue its monetary stimulus measures to support the economy amid signs of recovery.

The ECB Governing Council, led by President Jean-Claude Trichet, is likely to leave its key interest rate, which is the interest rate on main refinancing operations at its record low of 1%. Interest rates on marginal lending facility and deposit facility are expected to be held at their current levels of 1.75% and 0.25%, respectively.

The Frankfurt-based ECB is set to announce the decision at 7.45 a.m. ET. Thereafter, Trichet and ECB Vice President Lucas Papademos would hold a regular press conference.

Trichet is also expected to unveil new ECB staff economic forecasts. Economists expect better GDP projections this time compared to the one made in June as economic indicators strongly point to growth in the second half.

Chances for a return to growth in the 16-nation economy during the third quarter has become stronger. Major Eurozone economies, Germany and France exited recession in the second quarter, while the single currency bloc as a whole shrank only 0.1% compared to a 2.5% contraction in the first quarter.

Among recent economic indicators, manufacturing purchasing mangers’ index hit 14 month-high in August and service sector moved more closer to stabilization. Inflation has been in negative territory since June 2009.

Various sectors of the economy also showed increased confidence about the economy, though retailers were a bit more pessimistic due to a sluggishness in household demand.

Similar to elsewhere, rising number of unemployed is posing a threat to the Eurozone outlook. Latest data from the Eurostat showed that the jobless rate rose to its highest level since May 1999 in July. The seasonally adjusted number of unemployed rose 167,000 to 15.09 million.

This is likely to prompt the ECB to continue its monetary stimulus measures. But, Germany and France have raised calls for ending government spending measures as they fear high fiscal deficits. But, there are disparities emerging between the member nations with France and Germany rebounding much faster than Italy, Spain and Ireland.

“Setting the appropriate level of monetary stimulus will become increasingly difficult if these national variations become more firmly rooted,” said Markit Senior Economist Rob Dobson on the sidelines of the release of services PMI data.

Earlier on Thursday, the Swedish central bank left its key rate unchanged at 0.25%. The repo rate is expected to remain at this low level until autumn 2010.

Trichet is expected discuss further steps to address the global financial crisis when he participates in a two-day meeting of G-20 finance ministers and central bank heads in London that starts on Friday. This week’s G-20 meeting is a preliminary to the G-20 leaders’ meeting on September 24-25 in Pittsburgh.

Brussels (Reuters) - European Union finance ministers agreed on Wednesday to increase the bloc’s contribution to IMF funds to 125 billion euros ($178 billion) from 75 billion pledged in March.

The rise is a consequence of leaders from the Group of 20 industrial and emerging countries tripling, rather than doubling as initially expected, the amount of International Monetary Fund resources to $750 billion at their summit in April.

“There is agreement that 125 billion is a position that we have a common view on from Europe,” Swedish Finance Minister Anders Borg told a news conference. His country holds the EU’s rotating presidency in the second half of 2009.

“We have to put our money where our mouth is and obviously going to London and going to Pittsburgh we will have to commit to increasing our support,” he added, referring to respective meetings of G20 finance ministers and leaders later this month.

He said burden-sharing among the 27-country EU still needed to be discussed.

Separately, French Economy Minister Christine Lagarde rebuffed calls for the EU to be represented by a single seat at the IMF, partly to allow emerging economies such as China and India to have more clout at the institution.

“France … does not want for all the Europeans to be represented by a single seat,” she told a news conference.

“European countries represent around 33 percent of (global) GDP and around 33 percent of the (IMF) financing. We can ask whether some countries are overrepresented and others are underrepresented as a proportion in world GDP,” she added.

The European Commission, the EU’s executive, has called for the bloc to have a single representation at international bodies, but its finance ministers disagreed on the plan at a meeting in July.

However, they agreed to speak with one voice at such fora.

The IMF needs more resources to help a number of countries handle the worst economic crisis since World War Two.

EU sources told Reuters this week that the United States and Japan would each provide $100 billion for the IMF.

In a letter released on Monday, Lagarde and her German counterpart said they were ready to increase by two thirds their countries’ contributions to the IMF’s crisis-fighting war chest.

This would boost Germany’s contribution to the IMF New Arrangements to Borrow to some 25 billion euros and France’s to 18.45 billion euros, reflecting their economic weight.

Britain said on Monday it was ready to provide $11 billion in extra funds to the IMF, taking its total contribution to $26 billion.

BRUSSELS - Plunging inventories and private investment kept the euro zone in recession in the second quarter, data confirmed on Wednesday, but with the worst seemingly over, growth is seen resuming in the third quarter.

The European Union statistics office Eurostat confirmed its earlier estimate that the gross domestic product of the 16 countries using the euro fell 0.1 percent quarter-on-quarter after a 2.5 percent drop in the first three months of 2009.

“The worst is over for the time being,” the chairman of euro zone finance ministers, Jean-Claude Juncker, told reporters before talks in Brussels among his Eurogroup colleagues and the European Central Bank.

Second-quarter GDP was 4.7 percent lower than a year earlier, after a 4.9 percent fall in the first quarter.

“Shrinking times are over and the recovery can set in,” said Carsten Brzeski, economist at ING. “The recent data inflow indicates that the euro zone as a whole should leave technical recession in the third quarter.”

A plunge in inventories was the single biggest negative factor in the second quarter, subtracting 0.7 percentage point from the overall quarterly result. A fall in private investment took away another 0.3 percentage point.

But government efforts to support the economy with fiscal stimulus clearly bore fruit.

Household consumption and government spending added 0.1 percentage point each to the final outcome and trade contributed 0.7 percentage point as imports fell much more than exports.

“We had a small increase in consumption, so consumers probably benefited quite a bit from the scrapping bonuses for new car purchases,” said Juergen Michels, economist at Citigroup.

“And on top of that we also have an expansion of government expenditure, so this helped to limit the contraction in GDP in the second quarter,” he said.

RECOVERY SUSTAINABILITY

The euro zone’s two biggest economies, Germany and France, returned to growth in the April-June period, but the sustainability of the euro zone recovery remained uncertain.

Depleted inventories will have to be rebuilt, boosting production, while some economic revival globally is likely to boost demand for euro zone exports.

“However, some of the impact of the fiscal stimulus will fade before the end of the year,” said Nick Kounis, economist at Fortis.

“In particular, the boost to consumer spending from car sales will reverse, as the impact of the incentive scheme fades, and this is likely to pull the economy down temporarily in the fourth quarter,” he said.

Economists said the euro zone revival would most likely be driven primarily by exports on the back of a gradual improvement in the global economy, rather than domestic demand, which would remain under pressure from rising unemployment.

But that would likely mean a slow recovery.

“We doubt the euro zone economy might come back to solid and sustainable growth before mid-2010,” said Clemente de Lucia, economist at BNP Paribas.

“Foreign demand might not be strong enough to sustain export growth as demand from Britain, the U.S. and from central and eastern Europe is not forecast to pick (up) any time soon,” de Lucia said.

“Moreover, an excess of spare capacity, still poor demand and rising unemployment are likely to limit investment and consumption. Lastly, financial and monetary conditions are still relatively tight,” de Lucia added.

Economists said the GDP data would have little influence on the ECB’s interest rate discussions when the bank meets on Thursday amid market expectations of unchanged borrowing costs, now at 1 percent.

“We believe the ECB should be prepared to hold off from any exit strategy until it is clear that euro zone recovery is on firm grounds,” said Howard Archer, economist at IHS Global Insight.

Euro zone producer price data for July provided another reason for the ECB not to raise interest rates anytime soon.

Eurostat said prices at euro zone factory gates, which signal inflationary pressures early in the pipeline, fell 0.8 percent month-on-month in July for an 8.5 percent year-on-year drop.

Economists polled had expected a 0.6 percent monthly fall and an 8.4 percent annual decline.