A historic signing by BRICS economies was done for establishing the New Development Bank (NDB) at Fortaleza , Brazil . The primary purpose of the bank is to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies. The Bank shall have an initial authorized capital of US$ 100 billion.
The United States GDP advanced 4% in the second quarter of 2014, rebounding from a revised 2.1% contraction in the previous period. In addition, Federal Open Market Committee (FOMC), the arm of the Federal Reserve Bank (Fed) has announced to continue tapering in its bond-buying program, reducing its monthly asset purchases from US$35 billion to US$25 billion. Beginning August, the FOMC will add to its holdings of agency mortgage-backed securities at a pace of US$10 billion per month rather than US$15 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of US$15 billion per month rather than US$20 billion per month.
With respect to global growth outlook, IMF’s World Economic Outlook has anticipated the global growth at 3.4% for 2014 and 4% for 2015. As per the report the slowdown in global outlook for 2014 as compared to April 2014 projection is due to weak first-quarter, particularly in United States , and a less optimistic outlook for several emerging markets. On the other hand, a stronger growth is expected in some advanced economies in 2015 thereby pushing the global growth for that period. In emerging market and developing economies, growth is projected at 4.6% in 2014 and at 5.2% in 2015 in comparison to 4.7% in 2013.
Inflationary outlook in the OECD area has increased slightly by 2.1% in May from 2% in April 2014. The slight increase in the annual inflation rate in May was mainly driven by energy and food prices which increased, respectively, by 3.4% and 2.2%, compared to 2.7% and 2% in April 2014. Inflationary patterns are being managed by major economies as per their target inflation rates. At market fronts, with an exception of Germany ’ DAX, all major indices performed positively with China ’s SHSZ leading amongst major indices. With respect to prices of key commodities a downward trend was exhibited by all commodities except for copper in the month of July. Price of Copper increased whereas, prices of gold, silver, crude oil and sugar declined in the month of July compared to its previous month.
Overall trend in trade balances exhibited a mixed picture wherein trade surplus of Euro Area, and China declined and trade surplus of Brazil increased, while trade deficit of Japan increased. Following last month’s historic cut in deposit lending facility to (-)0.40%, the European Central Bank (ECB) has introduced a series of targeted longer-term refinancing operations (TLTROs) aimed at improving bank lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a window of two years.
GEM for the month of July 2014 is attached.