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GDP growth in the eurozone was 0.3% for the 4th quarter 2014. For 2014 eurozone GDP growth was 1.4%, according to Eurostat. Growth in GDP for Germany was 0.7% for the 4th quarter and 2.8% for 2014. Retail sales in December were particularly good in Spain and Germany, with sales up 2.8% for the eurozone over the prior year. Italy's GDP growth was stagnant and France's was 0.1% for the 4th quarter, showing that Germany and Spain are leading the way for eurozone recovery.

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The economic effects of US and German-French sanctions on Russia ar shown here in this Guardian article by Jim O'Neill, who helped coin the term BRICS that include Russia. The sanctions are likely to make the Russian economy even less significant than its current role in the world economy.  Renewable energy development and alternative use of LNG through new super terminals will likely be speeded up with new investments in Germany and the US. The result could be even faster depreciation of oil based assets for economies dependent on oil and gas exports. This would also contribute to the COP26 pledges for accelerated response to global warming. Western oil companies will also be put in a situation where an accelerated shift to renewables is seen as connected to less dependence on outside sources and so enhancing energy security. Productivity gains and gains in technology are also dependent on good relations with the economies of Europe and the US, Japan, for the rest of the world. This leaves economies that are left out in some form or other failing to grow up to their potential, a situation that accelerates over time and could be seen clearly in the next 5-10 years. This would impact growth rates and economic development in these countries and reverse years of gains in the last two decades.     ...

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Quantitiative easing, the Fed and the Bank of England creating money to buy government bonds, is creating the liquidity the surplus dollars and pounds that are lowering the two currencies value. But as the Economist notes there is no easy exit strategies for the two central banks, as abandoning QE would lead to asharp rise in bond yields, continuing it would maintain dollar weakness. WIth the dollar's uncertain situation, the growing deficit, and low interest rates allowing QE to continue, the Economist sees an eventual breakdown of current currency arrangements, and the emergence of anew currency system similiar to Bretton Woods.

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Krugman says that China fears that a decline in the value of the dollar will reduce the value of the 70% of the $2 trillion in assets it holds, that are in the form of US Treasury bills. This may have been the reason Zhou Xiaocuan, China's central bank governor called for a new currrency to replace the dollar as new "super-sovereign reserve currency." He doesn't think this is likely to happen. Neither is his hope and that of Japan that somehow the two countries can export their way out of current difficulties. The US will not be the market it once was, that is certain. So Krugman says China, Japan, and the Europeans on the issue of the Stimulus are all hoping that things will return to the way they were. Something that is not going to happen. March figures in the US for jobs lost hit an high of 663,000, and this crisis says Krugman has years to run.

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The weaker dollar has given a boost to U.S. exports. The dollar has dropped by 9.1% compared to the prior year against a broad basket of currencies. U.S. exports have provided 1.4 percentage points of the 3.0% annualized growth since the 3rd quarter of 2009. The U.S. dollar is now 5% away from its all time low in March 2008, when tracked using the dollar index. Before the 2008 crisis the dollar had over a six year period lost about 40% of its value. Low interest rates in the U.S. and concerns about the deficit have contributed to the dollar's decline in value. While the decline helps boost exports, it also increases the price of oil in dollar terms and increases inflation. A Gallup poll in April showed 42% of Americans had no confidence in the Fed's policies for the economy, and 43% had no faith in Treasury Secretary Geithner. The decline is taking place even as Japan is recovering from the earthquake, and Greece is likely to have to restructure its debt obligations with European banks taking losses....

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The problems divergence between developed and developing economies creates for companies- in slow growth on one side and fast growth with asset bubbles on the other side.

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Using a new methodology India's statistics agency revises growth for 2013 to 5.1%, for 2014 fiscal year to 6.9%. Growth for 2015 is forecast at 7.4%. For the 3 months Oct-Dec. 2014 the growth in GDP was at 7.5%. Changes in methodology include computing it at market price, not at factor cost. This adds up consumer and firm spending instead of producer costs.

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Joseph Stiglitz writes that keeping the dollar as the reserve currency is no longer the option. He tells us that it comes with some hidden costs such as a weaker global economy. Having developing countries keep hundreds of billions of dollars in the US in low interest earning reserves makes no sense considering the needs of developing countries, and the improved prospects for the USA and Europe in exports to a growing developing country economies. He points out that a new global reserve currency, with an orderly transition, may be the most important reform to ensure the longterm health of the world's economy. Its bad for the USA to keep exporting T-bills, says Stiglitz, as it does not create jobs. And its bad for all concerned as it lowers global economic growth. Especially he says when it is so unseemly for developing countries not to use the money to improve living standards in their own countries, with the help of exports from developed countries, that in the end improves global growth and the global future....

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Economist John Spence on advice to the Chinese government to tackle problems of shifting from an export based economy to one more dependent on domestic spending. And managing the shift upscale to sophisticated technologies from basic consumer goods.

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China is increasing export rebates aand investing in vocational training to keep the economy growing . Laid off workers are returning to their farms. THe real impact on growth and industrial production will come in 2009 according to Clement Chen, the chairman of the Federation of Hong Kong Industries. Because China has sustained a high growth rate for so long and the US has not yet felt the full impact of the recession it is possible to underestimate the impact on China's export dependent economy of a deep slump in exports as western markets shrink. The current 9% for the third quarter which does not reflect the credit crisis of October in global markets shows merely the early impact of slowing growth, with serious debt induced dowturn in the western economies China could see its growth drop to 6-7%.

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The dollar is not expected to suffer asharp drop even though problems of increasing debt, and China's pegging of the yuan to the dollar remain for the future.

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Japan's new prime minister told the Japanese Parliament in a policy speech, that a crisis like that in Greece was possible in Japan, if trust in national bonds was lost and the policy of public spending to lift the economy was not reversed. This speech followed the resignation of Shizuka Kamei, as banking minister. Kamei was seen as an advocate of continued public spending. He cautioned that a policy of relying heavily on issuing debt could not be sustained for long. Japan has government debt of $9.7 trillion, which is close to twice its gross national product in 2009. Much of this debt is held by the public in Japan, but analysts have cautioned that with the aging population, it is possible that people who retire will need the cash from bonds, requiring the government to turn to the debt markets for financing. Among the proposals Kan suggested is raising the 5% sales tax to pay for rising social welfare costs for an aging population. Satoshi Arai, the new national strategy minister, says the government will draft a plan by June 22 to address the public debt. He said the government would not exceed $500 billion in bond issuance for fiscal year ending March 2012....

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This article in NYT by a China expert based in Hong Kong points out that a key driver in the current developmetns in Korea are not understood. With the growth of China's influence in East Asia and a decline in American influence many of the countries in the region are rebalancing. Vietnam and Singapore are pushing back. In the same way North Korea under Kim Jong Un is concerned about its dependence on China with 90% of its trade conducted with China. The Chinese participation in the strong sanctions introduced by president Trump has increased this awareness of its dependence on China. President Xi Jinping has also ignored North Korea as China focuses on larger issues in international relations, including its relationships with the U.S., EU and India. This strategic development is what drives the current meetings between president Moon of South Korea and president Kim of North Korea, and the planned meeting of Kim with president Trump.  This China expert says the shift in better relations could be part of North Korea's effort to open up to the U.S, South Korea and Japan, in an effort to diversify its relationships to reduce dependence on China. This does not mean the unification of North and South Korea, he says, because it would mean loss of power for the Kim regime and would be too costly for the South. The nuclear missile development was part of an effort to preserve the Kim regime. The Kim regime is also focusing efforts on economic development which would be better achieved by opening up to the U.S., South Korea and Japan. ...

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Koichi Hamada, a former professor of economcs at Yale University, is one of prime minister Abe's advisors for the policy called Abenomics. He says the increase in the consumption tax was never part of Abenomics. It was the legacy of the previous Democratic Party of Japan's policies and of prime minister Noda, who pushed for it in the last 2 years of his administration. Nikkei polls in 2011 showed 53% of the public opposed to the doubling of the consumption tax to 10% by 2015 proposed by Noda and passed in 2012. Ichiro Ozawa's group of legislators left the DPJ over this issue. The real force behind the push to double the tax was the Finance Ministry, which warned the Abe government that not increasing the tax would make Japan look fiscally irresponsible. The Finance Ministry appears to have lost sense of the timing and fiscal hawks in the LDP party had gone along with it. The deteriorating global economy in the third quarter has hurt Japanese exports, and the lack of wage increases coupled with the increase in the consumption tax to 8% from 5% made Japanese feel poorer, leading to conditions that exacerbated the situation. Recognizing this Yamamoto says Abe has called the snap election in Dec. 2014, after postponing the second increase in the consumption tax to 10% in 2015 which the Noda legislation set to the future date of 2017. He says Abe had to have the guts to take on the Finance Ministry for Abenomics to work....

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The yen is 34% stronger than the Korean won since mid 2008, hurting Japan's competitive edge. This affects exporters like Toyota which sees annual profit reduced by $390 million or 35 billion yen for every one yen appreciation against the dollar. The dollar now trades at 88 yen over 30% stronger than the precrisis level in 2008. So how does the new Japanese government see this. Prime Minister Yukio Hatoyama and the Bank of Japan have made comments suggesting that they favor a stronger yen, making imports cheaper to help spark a rebound in consumer spending missing in Japan since the 1980's. This would reduce the dependence on exports for growth, something that severely hurt Japan and Germany when the world economy took a dive late last year in the global financial crisis.

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China's GDP growth for the 4th quarter of 2012 was 7.9% over prior year, increasing from 7.4% in the third quarter of 2012, according to the National Bureau of Statistics. GDP growth for 2012 was 7.8%, down from 9.3% in 2011. Growth is stabilizing at 8% which shows China is managing the economy, slowing the growth rate with a smaller stimulus planned in 2013, and working on sustainable growth for the longer term. This is a significant positive as a new leadership takes over in China and sets priorities for stable growth, and improvements in housing and health care.