The joint meeting of the World Bank and the IMF Development Committee was accomplished with the IMF’s members pledge to contribute over $430 billion to an anti-crisis firewall which is aimed to restore market confidence and support the recovery of global economy growth, the news released at the IMF Survey Magazine on Saturday, 21 April. However, even successfully mobilized global fund ought to strengthen safety net, markets pressure on Monday, 23 April suggested that current macroeconomic data and contraction in Europe is above the future promises. So, are there any surprises for Friday, 27 April 2012?
The 25 EU governments signed agreements to tighten budget discipline in March. Moreover, 17 eurozone finance ministers agreed on the permanent European Stability Mechanism worth of €500 billion which is combined with the remaining temporary European Financial Stability Facility comprise €700 billion. In spite of this, Spain and Italy are on the closest watch in Europe. The Spanish and Italy government bond auctions evoke yield spikes. The yield on 10 year Spanish government bonds reached 6.05% and the yield on Italy government 10 year bond increased to 5.77% on Tuesday, 24 April. Though on the other hand, according to the data provided in the consolidated financial statement of the Eurosystem as at 20 April 2012 which was released by the ECB on Wednesday, 25 April, liabilities to general government declined by €3.5 billion to €155.3 billion and the Eurosystem’s net lending to credit institutions fell by €38.8 billion to €152 billion compared to the previous week. Similarly, the European Commission released the draft budget for 2013 with the investment objectives in growth and jobs on Wednesday, 25 April, which represents €137,9 billion of payments with dedicated €9,0 billion (28,1% increase on 2012) to the Research framework Programmes, €546,4 million (47,8 % increase) set for the Competitiveness and Innovation Programme, €49 billion (11,7 % increase) allocated for structural and cohesion funds as well as €1,2 billion (15,8 % increase) for lifelong learning.
However, growth is not only the Europeans objective. Get economy back to normal levels within 2-3 years is the goal of the G20 members announced at the IMF-World Bank Spring Meeting in April 21, 2012. Moreover, the governance reforms of the IMF are on the way. The quota formula which reflects members’ relative positions in the world economy will be reviewed by October 2012 and changes most likely will give greater influence for emerging markets and developing economies. Some of changes may be radical associated with the BRICS’ Delhi Declaration, 29 March 2012. The BRICS initiative to form South South Development Bank with mobilised resources for infrastructure and sustainable development projects in BRICS and other developing countries may spur growth in emerging regions, diminish dollar usage in global transactions and entrench BRICS’ currencies as global reserve currencies.
So, are there any surprises for Friday, 27 April 2012? Let it be released GDP for the United States. The annualized first quarter’s estimated growth is 2.5% which is less than the previous period - 3% growth.