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GDP expanded at 3.5% in the fourth quarter of 2016, according to the Turkey Statistics Office. This follows a contraction by 1.8% in the third quarter of 2016. For the full year the GDP growth is 2.9 percent, a decline from the 6.1% in 2015. In 2015 Turkey gained from lower oil prices. This was offset in 2016 by the politics in the region- the increased instability in the country following a crackdown on the opposition and media, internal conflict in the Kurdish region which appeared for a time to be leading to peaceful settlement. As a result tourism revenues declined by 30% and this was offset by increased government spending. The uncertainty before the referendum also leads to decline in foreign investment and investment by domestic firms.

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Krugman is critical of ECB president Trichet's decision to raise interest rates in 2010, because of the way it affects Spain, Italy, and Portugal. Increase in interest rates by the ECB affect the entire eurozone and this means, he points out, that inflation in Germany would be extremely low -about 1% for the next five years- and the result being that inflation would be much lower in debtor countries like Spain. A decrease in interest rates with inflation at 3-4 % in Germany would be better for the debtor countries (Spain, Italy, Portugal, Ireland) as this would enable them to cut prices and costs relative to Germany and other creditor countries. The first step taken by the new ECB president, Mario Draghi, was a small increase in interest rates. Krugman asks if the private demand is affected negatively by the end of a debt financed boom in the debtor countries, and austerity programs reduce any growth in the public sector, then where are the new jobs supposed to come from? A policy that reduces the prices of the products of debtor countries relative to creditor countries like Germany- so that exports can generate necessary growth- is needed says Krugman. ...

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Ukraine's central bank says its foreign currency and gold reserves dropped to $6.4 billion in Jan. 2015. The conflict in the east with the flareup in Fe.b 2015 is taking its toll on the Ukrainian economy. The central bank raised interest rates and moved to a freely floating exchange rate in Feb 2015. The currency hryvnia lost half of its value in 2014. Ukraine's currency lost one fifth of its value on Feb. 5, 2015. FactSet figures show the decline was down to 25 hryvnia to the U.S. dollar.

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Denmark's central bank cuts its main interest rate twice in Jan. 2016 as the ECB announces its $1 trillion euro bond purchasing program for 2015-2016. The action is intended to reduce the impact of the ECB program as its currency, the krona, strengthens against the euro. The action is to maintain export competitiveness.

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Russia's State Statistics Committee says growth slowed in the second quarter of 2013 to 1.2%, declining from 1.6% in the first 3 months. Inflation is at 6.4% for August, according to the Economy Ministry. The Russian central bank has resisted lowering rates because of the inflation target of 6%. The Putin adminstration is seeking 4-5% growth, after an average annual growth rate of 7.2% from 2000-2009, during the period of high growth in Putin's first term as president and second term as prime minister. There is a slowdown in foreign investment in the Russian economy, as investors in Europe and the U.S. shift away from emerging markets in 2013. In addition to this commodity prices are declining.

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A 12% drop in Russia's RTS stock index on March 2, 2014, as Russia occupied the Crimea in Ukraine. The Russian economy was slowing down before the crisis. This is likely to reduce foreign investment in the economy. The ruble has declined 9% aginst the dollar in Jan-Feb. 2014. As a temporary measure the Russian central bank made a rate hike on March 2, 2014 of 1.5% to 7%. This is a difficult act for the central bank as raising rates could push the economy into recession.

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Mariana Rajoy of the Partido Popular, Spain's conservative party, leads the opposition Socialist party candidate by a wide margin of over 15% in polls ahead of general elections in Spain on November 20, 2011. Rajoy is planning major changes in the first 100 days and the early period of his administration to bring down Spain's deficit and restore economic growth. Spain faces difficulty borrowing in capital markets after contagion from Greece and Italy, and Spanish bond yields were up to 7% on Nov. 17, 2011. About 150 billion euros in debt will have to be financed by Spain's government in 2012. Spanish banks will have to raise an additional 120 billion euros, and nonfinancial corporations will have to raise 30 billion euros, according to PriceWaterhouseCoopers. Luis de Guindos, head of Financial Center, a banking industry think tank, says the challenge to get markets to open up for Spain is to create expectations that the Spanish economy will return to growth. The outgoing administration of Jose Luis Zapatero, has taken some austerity measures with public sector wage cuts, changing labor laws to make it easier to hire and fire workers, and a pensions overhaul to move the statutory retirement age to 67 from 65. ...

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Large capital outflows from the eurozone to the U.S. and currencies of smaller nations as the U.S. dollar strengthens in 2015.

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In 2015 the new government of Antonio Costa took a U turn from austerity policies followed in return for a bailout from the European Union. This has helped Portugal achieve the highest growth in a decade coming back from a severe slump. Unemployment is cut in half with growth in the tourist industry, and investment in agriculture, construction, aerospace.  Traditional industries such as paper mills and textiles have invested in new technology resulting in a boom in exports. German companies Bosch, Mercedes Benz, and others have also invested in the country. Portugal has a good relationship with Germany and the European Union which has also helped attract foreign investment. Prime minister Antonio Costa says "too much austerity deepens a recession and leads to a vicious circle." Antonio Costa came to power in 2015 on promises to reverse cuts in income made by the previous government to reduce the deficit in exchange for a 78 billion euro international bailout. The government backed by left parties left out of government since 1974 with the collapse of the dictatorship, was able to increase public sector salaries, the minimum wage and pensions, over objections of the IMF and the German government. Incentives were given to small business in the form of tax incentives, development subsidies and funding. Budget balancing was achieved by cutting expenditure on infrastructure and other spending, cutting the budget deficit from 4.4% when Costa took office to 1%. A surplus is planned for 2020, ending a quarter century of budget deficits. ...

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The Ifo Institute monthly business confidence survey shows a reading of 104.7 for November, up from 103.2 in October 2014.

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Higher inflation in Germany could help rebalance the German economy by increasing imports. German inflation has averaged 1.6% since 1999, compared to 2.0 % for the eurozone. It was 2.3% in December. And after years of wage restraint German unions are increasing the wage demands. IG Metall is looking for a 6.5% wage increase. And interest rates at 1% are quite low for Germany where unemployment is down to 5.5%, according to Eurostat, and employers have to meet higher wage demands. The ECB is aiming at 2% inflation and Germany has a 26% weighting in the calculation of the rate. But as Italy, France and Spain see inflation decline there is room for addditional inflation in Germany before the eurozone goes well above the 2% inflation rate. By freezing wages and improving price competitiveness with German products, other countries could increase exports. Yet the prospects of this making a large difference is limited because German companies are likely to push for wage restraint. The Bundesbank predicts wage increases of 2.4% in 2012. Over time the wage restraint in other eurozone countries and even slightly higher wages in Germany would reverse the trend since 1999 of Germany having much lower inflation, and this could be one of the factors helping in rebalancing....

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Wealth for top 7% of U.S. households averaged $3.2 million in 2011, compared to $133,817 for the other 93% of the population. Third quarter 2013 household net worth is 615% of after tax income, up from 570% in 2012. The uneven distribution of household wealth and the gains from the stock market recovery going disproportionately to wealthier investors, does not provide strong enough underpinnings for robust consumer spending.

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Louis Gallois, CEO of EADS gives his views about reviving European industrial competitiveness.

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U.S. Secretary of State Hillary Clinton, says Russia's entry into the World Trade Organization in the summer of 2012 will be good for the global economy and for the U.S. It will increase U.S. exports to Russia from the low level of 1% of U.S. global exports. It will also set the right tone for improving U.S.-Russia relations and improving cooperation on global issues. She calls for Congress to change the Jackson-Vanik amendment and setting up normal trading relations between the U.S. and Russia. It is a smart investment in trade with Russia,and also a way to help Russia diversify its economy, setup an open political system and put its world trading relationships on a more transparent basis with clear tariff rates.

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As growth slows in Germany, with contraction in the second quarter followed by expected growth of annualized 1% in the remainder of the year, debate is growting for tax cuts and ways to promote business investment. DIW, a think tank in Berlin, says the government's goal of a balanced budget may be unsustainable in the current economic climate. Deep spending cuts in Spain and Italy have not been supported by increased spending in Germany, say critics, leading to a too tight fiscal policy for the weak state Europe is in. ECB president Draghi is also pointing out the the need for changes, by saying- "It may be useful to have a discussion on the overall fiscal stance of the euro area with the view to raising public investment where there is fiscal space to do so."

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Former German chancellor from the SPD party, Gerhard Schroeder, is interviewed by Rayond Zhong of the WSJ. Here he describes his views on the way Agenda 2010 was implemented in 2003 in Germany to gain public support for changes to Germany's welfare state. He also talks about the eurozone crisis and how Angela Merkel has handled the crisis, and the right approach for an Agenda 2020 for Europe. The interview was made at Schroeder's law office in Hannover, Germany. This is a detailed and exceptional interview by Zhong covering all facets of the eurozone crisis and Germany's response. Schroeder says it was right to give Greece more time to make the reforms, so that the Greek people could see that this path would help in a positive way. In doing this he cites his own experience when as the reforms for Agenda 2010 to make Germany more competitive were taking place- including cuts in spending and lower taxes- he turned down his finance minister Hans Eichel's proposal in 2003 for an additional 20 billion euros in cuts to put Germany in compliance with EU law....

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Government GDP figures show the GDP shrank by 1.8% in the third quarter of 2016 compared to the same period in 2015, the first such contraction in the economy since 2009. Household consumption was down 3.2%. The sharp decline in the value of the lira by 20% in 2016 makes imports costlier, in an economy dependent on consumption spending and tourism for higher GDP growth. Political uncertainty with instability in Turkey following a crackdown on opposition and media also leads to decline in foreign investment and investment by domestic firms.