When oil prices began to decline in 2016, Russia’s oil-dependent economy began to slump. Unfortunately, that slump does not appear to be righting itself very quickly, and may even deepen with the introduction of long embargoed Iranian oil to the market this year. As a result, the International Monetary Fund (IMF) has again slashed its forecast for Russia, downgrading it into an ongoing recession through the end of 2016 and beyond.
Secretary of the Treasury Jacob Lew will meet with Puerto Rican officials on Wednesday to address the island’s mounting debt crisis. Puerto Rico has defaulted twice on its payments and it suffers with a high public debt of $72 billion, and the secretary hopes that the U.S. Congress will act by March of this year. The commonwealth’s deficit expects to stretch from $14 billion to $16 billion in the coming five years.
Slowing home sales, falling property values, and growing unemployment are ringing alarm bells in oil-dependent Houston. Last week, the Houston Association of Realtors released a report showing that home sales are falling. In total, single-family home sales fell 2.4 percent on a year-over-year basis in 2014.
The Organization for Economic Cooperation and Development (OECD) recently released a study on the “unregistered economies” of its various member states. According to the study, the nation with the largest portion of its economy in the unregistered territory was Turkey, followed closely by Estonia and Mexico.
The world community lifted Iranian sanctions upon discovery that Iran has abided by the terms of the nuclear deal, according to Business Insider. However, President Hassan Rouhani faces a tough road ahead with regard to economic reform, due to opposition from hardliners and Ayatollah Ali Khamenei. The Iranian economy suffers from declined living standards, rampant inflation and widespread youth unemployment.
Chinese officials predict economic turmoil for the global economy. State Councillor Yang Jiechi told G-20 representatives in Beijing that recent volatility and “constant changes and intense transformations” will lead to unprecedented challenges to the world. “It is not possible to completely discard the possibility that an economic crisis could once again take place, and the problem should not be neglected,” he said in the meeting, adding “preventing or reducing negative effects from countries’ domestic policy measures is a pressing task."
For years, the World Bank has represented the only serious player on the block when it comes to raising national level finance needs. However, the World Bank now has a rival in the form of a Chinese organization known as the Asian Infrastructure Investment Bank (AIIB). The new bank’s headquarters is in Beijing, China, and is considered by many to be little more than a direct challenge by China to the supremacy of the World Bank and the economic clout currently held by the United States.
The Venezuelan situation degrades rapidly as President Nicolas Maduro declared a state of emergency, but this new power is subject to rejection or approval from Congress, according to Reuters. Venezuela struggles from lethal combinations of low oil prices and a staggeringly high inflation rate of 141.5 percent, the world’s worst inflation level. According to analysts, the Venezuelan economy will fail to improve in 2016, and many suspect that the South American country will undergo default this year.
Import prices fell far lower in December 2015 than in the prior month, while export prices fell nearly twice as much as analysts had expected. Import prices fell 1.2 percent on a month-over-month basis in December, according to the Bureau of Labor Statistics. That represented the largest drop in import prices since August 2015. While fuel prices continue to decline as oil future prices flirt with sub-$30 levels, the Bureau of Labor Statistics noted non-fuel prices “continued to trend down as well.”
International Monetary Fund Managing Director Christine Lagarde rejected Nigeria’s loan application due to the country’s potential for an economic rebound, according to AFP. In December, Nigeria announced such efforts as diversification and infrastructure investing—factors which bolstered the IMF’s confidence in Nigeria. The organization will monitor the country’s budget and finances going forward.
