The sharp decline in the US economy is ending and recovery will come about slowly according to a report released by the International Monetary Fund (IMF) yesterday.
In an annual report on the world’s largest economy, IMF stuck to its earlier forecasts that the US GDP will contract by 2.6% in 2009 and then rise by 0.8% in 2010.
Due to the large monetary and fiscal stimulus and wide range of measures to restore the financial stability, “the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened,” the IMF said in its report after the Article IV annual consultation with US officials.
However, “financial strains are still elevated and the outlook remains for only a gradual recovery, with risks still tilted to the downside,” it said.
Also on Friday, the US Commerce Department reported that the US economy fell at a more subdued 1.0% pace in the Y 2009 Q-2, a strong signal that the worst recession since the Great Depression has eased, and is coming to a close.
Global auto industry in recovery
The global auto industry is starting to recover from months of declines, pushed by strong demands in such countries as China and Germany, a Canadian report said yesterday. The global auto sales of the Y 2009 Q-2 reached 48 million units, up from an eight-year low of 43 million units in the first three months of the year, with sales in June reaching the highest level on record since last July, the Scotia Economics, a publication of Canada's third largest bank Scotia Bank, said. China posted the highest sales figures in developing countries and Germany reported the best numbers among mature markets, the report said. The bank foresees the revival will soon spread to North America, which will boost economic activity.
Brazil's Vale announces light Crude Oil discovery in Vampira
Vale, Brazil's largest private company, on Friday reported the discovery of hydrocarbons in an exploratory block off Brazil's southeastern coast. The hydrocarbons were located in the Vampira exploration well in the Santos Basin, Vale said. The global mining company said traces of light Crude Oil and natural gas were found in the Vampira well and that the exact volume will known after further tests. Vale in May announced the discovery of natural gas in the Panoramix well, also in the same exploratory block. Vale has a 12.5% participation in the block's exploration consortium. Brazil's state-run oil giant Petrobras has 35%, while Spain's Repsol, the block's operator, has 40%, and Australia's Woodside has 12.5%.
US and UBS strike deal on client identities
On Friday the US and Switzerland reached an agreement on the closely watched dispute over whether UBS should be forced to reveal the identities of thousands of its American clients. Details of the settlement, which could deal a blow to Switzerland’s famed bank secrecy, are still being negotiated by the two sides. However, Stuart Gibson, a lawyer for the US Department of Justice, told the federal judge presiding over the civil case in Miami that there was an “agreement in principle”’ on the “major issues” and that the remaining issues were expected to be resolved within a week. Hillary Clinton, US secretary of state, said before a meeting in Washington with Micheline Calmy-Rey, her Swiss counterpart: “Our governments have worked very hard on this to reach that point, and so we are very pleased.” Asked whether the US had remaining concerns about bank secrecy and tax evasion, she said: “There’s been an agreement in principle.” Mrs Calmy-Rey said the Swiss government was “very satisfied” with the outcome. Shares in UBS, one of the world’s biggest wealth managers, rose nearly 7 % in New York trade yesterday. If UBS does hand over client names, tax authorities in other countries could use this as a precedent that would further breach Swiss bank secrecy. Switzerland’s image as a confidential haven for private assets had already taken a hit in February when UBS was forced to hand over 255 US client names suspected of using sham companies to evade tax.
