Could the U.S. economy be seeing a repeat of last year’s winter contraction? The latest estimates are moving in that direction, though they’re still in positive territory.

Several economists lowered their estimates for first-quarter growth in gross domestic product following a disappointing report on business spending and investment.

Orders for durable goods—products varying from computers to lawn mowers to washing machines designed to last at least three years—declined a seasonally adjusted 1.4% in February from a month earlier, the Commerce Department said. And a key measure of business investment fell for the sixth straight month, suggesting U.S. companies are still cautious about spending amid weak global demand.

Many economists said the report shows weaker-than-expected spending on equipment at the start of the year, a potential drag on economic output.

At least one first-quarter tracking estimate is already close to zero. The Federal Reserve Bank of Atlanta put its gauge at 0.2%, down from its earlier estimate of 0.3%.

Morgan Stanley economists lowered their estimate for first-quarter growth to an annualized 0.9% from an earlier forecast of 1.2%, pointing to light inventories and lower capital goods exports as weighing on GDP. They said other factors, including severe winter weather and the West Coast ports slowdown, also could weigh on GDP.

“Even if weather and ports are as much as a roughly 1-point drag, that would be pretty bad,” Morgan Stanley economist Ted Wieseman said in a note to clients.

Economists at Barclays lowered their projection a tenth of a percentage point to 1.2%. The forecasting firm Macroeconomic Advisers also trimmed its estimate down to 1.2% from 1.5%. Both cited, among other factors, worries that the drop in shipments last month foretells a decline in first-quarter equipment investment.

J.P. Morgan Chase economists lowered their first-quarter forecast to an annualized 1.5%, from 2%, saying a decline in investment by oil companies — the result of the plunge in oil prices — could offset the lift from higher consumer spending.

“Overall, given the usual noise in the data, as well as a melange of other special factors, we do not view the 1.5% [First-quarter] tracking as so far below the 2.4% average of the current expansion to raise more serious worries,” J.P. Morgan chief U.S. economist Michael Feroli said in a note to clients.

The U.S. economy contracted at a 2.1% annual pace in the first quarter of 2014, a drop many economists attributed to severe winter weather. The economy bounced back with growth at a 4.6% pace in the second quarter, 5% in the third quarter and 2.2% in the fourth quarter.

Brazil

Brazil’s economy probably contracted in the fourth quarter of last year as stagflation plagues the world’s second-biggest emerging market.

Gross domestic product fell 0.1% from the three previous months, according to the median forecast of 38 economists surveyed by Bloomberg. Output remained flat for the full year, economists estimated.

President Dilma Rousseff’s government is struggling with a combination of above-target inflation, stagnant growth, a sinking currency and a record budget deficit. With the central bank raising rates and analysts forecasting a recession this year, consumer and business confidence have plunged. To revive investment and growth, Rousseff and Finance Minister Joaquim Levy have pledged to tighten fiscal discipline.

“We’re facing a huge confidence crisis, and to assume a rebound at the end of this year or maybe next year will depend on a rebound in business confidence,” Roberto Padovani, chief economist at Votorantim Ctvm, said by phone from Sao Paulo. “If you don’t have a rebound, you’re going to have a lot of problems on the fiscal side, then the political side.”

Brazil’s Finance Ministry declined to comment on the prospect of contraction in the last quarter of 2014.

The fourth quarter poses a challenge for economists who study Brazilian GDP because the statistics institute, known as the IBGE, is implementing a new methodology for its calculation.

“We’ve used the old methodology to present our figures, but they may come out totally different, not because of the dynamics of the economy, but because of the new methodology,” Jankiel Santos, chief economist at BESI Brazil, said by phone from Sao Paulo. “I’m in complete darkness.”

The new methodology for annual GDP data, released earlier this month for the years through 2011, boosted growth in that year to 3.9% from 2.7%. The new quarterly methodology may produce a reduction of ratios such as debt, current account and budget as a percentage of GDP, according to Alberto Ramos, Goldman Sachs Group Inc.’s chief Latin America economist.

The new tabulation follows recommendations of international bodies including the Organization for Economic Co-operation and Development, International Monetary Fund and the World Bank, and brings Brazil in line with best international practice, according to Neil Shearing, chief emerging markets economist at Capital Economics Ltd. Because of the changes, the question of whether the economy last year contracted slightly or eked out some growth becomes less relevant, he said.

“The process itself of constructing GDP data is very difficult, and we need to bear that in mind when interpreting the data, but the IBGE has just added to the general uncertainty,” Shearing said by phone from London. “They’ve not helped themselves.”

Releasing all data from the new quarterly series simultaneously -- rather than fourth-quarter data alone one day and the rest sometime before -- is in line with international recommendations, the IBGE’s press office said in an e-mailed statement.

Based on the existing methodology, a contraction from October to December would be the fourth decline in the past six quarters. GDP grew 0.1% in the third quarter, drawing Brazil out of recession.

The economy was hobbled by shrinking investment stemming from a drop in confidence, according to Goldman’s Ramos and Paulo Vieira da Cunha, chief economist at hedge fund Ice Canyon. Brazil’s business confidence, as measured by the National Industry Confederation, deteriorated in 2014 and declined further this year, reaching its lowest since records began 11 years ago.

“We saw particularly in the fourth quarter a major, major blow to investment,” Vieira. “It was the beginning of everything coming apart.”

Economists surveyed by the central bank forecast that GDP will decline 0.83% in 2015 and grow 1.2% in 2016.

Standard & Poor’s last March cut Brazil’s credit rating to the brink of junk due to slow growth and expansionary fiscal policies fueling higher debt levels.

Latin America’s largest nation posted a nominal budget deficit of 344 billion reals ($107 billion) in 2014, the biggest since records began in 1991 and more than double the deficit of 2013. Gross debt climbed to 63.5% of GDP at year-end and has continued rising.

Further hampering investment, interest rates have been on the rise since three days after Rousseff won re-election in October. The central bank has raised the benchmark Selic at four straight monetary policy meetings, pushing it to 12.75%. The highest borrowing costs in six years won’t be enough to prevent annual inflation from accelerating to 8.12% by year-end, according to the latest central bank survey of economists.

Faster inflation in this year’s first quarter is largely due to higher prices for regulated items such as gasoline and electricity -- one element of the government’s effort to repair its finances.

Rousseff’s new economic team has also capped spending by ministries and proposed cuts in unemployment and pension benefits. S&P affirmed Brazil’s credit rating at the lowest investment grade with a stable outlook, citing a “marked adjustment in various policies” to restore credibility.

As the labor market weakens, interest rates rise and inflation accelerates, consumer confidence as measured by the Getulio Vargas Foundation has fallen to a record. On March 15, more than 1 million people took part in demonstrations against the government in cities across the country. In the aftermath, Rousseff’s approval rating fell to 13%, according to a Datafolha poll of 2,842 people conducted March 16-17 that had a margin of error of plus or minus two percentage points.

Whether GDP edged up or down in the fourth quarter will do little to change the basic scenario as tighter fiscal and monetary policies take hold, according to Ramos.

“The economy entered 2015 with very weak momentum,” Ramos said. “It seems that it nosedived at the beginning of the year. That’s a reflection of the acceleration of the macroeconomic adjustment that the economy needs to go through.”

Canada

Canada’s economy performed better than expected in January, shrinking modestly as a drop in the services sector was somewhat offset by strength in resource extraction and utilities.

Canada’s gross domestic product, the broadest measure of goods and services produced in the economy, fell 0.1% to 1.65 trillion Canadian dollars ($1.30 trillion) following a 0.3% advance in December, according to Statistics Canada. The January results slightly exceeded consensus expectations for a 0.2% decline, and some economists had forecast an even deeper drop.

The report is likely to reinforce the Bank of Canada’s wait-and-see approach to determining the impact of lower oil prices on the economy. The central bank cut its benchmark interest rate in January to 0.75%, calling the surprise move “insurance” against the tumble in the price of crude oil, Canada’s top export.

Expectations for a weak reading for January were partly fueled by the Bank of Canada, which had warned that the damage from lower crude prices would be front-loaded this year, with January bearing the bulk of the damage. Bank of Canada Governor Stephen Poloz underscored this expectation in a speech in London last week in which he said he expected to see “quite a lot” of economic weakness in the first quarter of 2015. In a subsequent interview with the Financial Times, Mr. Poloz said the first quarter will look “atrocious” because of the importance of oil to Canada’s economy.

“January was weak, but not ‘atrocious,’” said Avery Shenfeld, chief economist at CIBC World Markets, following the release of the data.

Several Canadian economic indicators for January were dismal, including lower retail sales and weak factory shipments. Mr. Poloz said in London that there was reason to believe the non-resource side of the economy would pick up by midyear and help drive economic expansion.

The monthly GDP report differs from the quarterly one, as it captures the supply side of the economy and doesn’t take into account measures of consumption, such as business investment, housing and consumer spending. Nevertheless, the monthly report provides a good indicator of where the economy is headed in the quarter.

Mr. Shenfeld said the Canadian economy was unlikely to hit 1% annualized growth in the first quarter. For the Bank of Canada, which has forecast 1.5% expansion in the January-to-March period, the issue will “mostly be about how much of that weakness extends into the subsequent two quarters,” he said.

The decline in Canadian GDP in January was fueled by weakness in the services side of the economy, which accounts for over two-thirds of total output. Service-sector output fell 0.3%, the first drop since February 2014.

The drop in services was offset by a 1.4% rise in resource-sector output. Oil-and-gas extraction rose 2.6% in January, after a 2.1% drop in December, led by increased production in the Alberta oil sands. Oil sands production is forecast to remain relatively stable in 2015 even amid the crude-price fall. The data agency said production of conventional crude petroleum and natural gas fell in January.

Manufacturing output declined 0.7% in January. The drop came even though Canadian factories are expected to benefit from a weaker Canadian dollar, which has fallen since the midpoint of last year due to lower commodity prices.

ASIA

China

Earlier this year, the Chinese government released its annual economic report and confirmed fears of an economic slowdown in the world’s second largest economy. For the first time since the 1998 Asian financial crisis, GDP growth missed the government’s target, while registering the lowest rate of growth since 1990, when the country remained under international sanctions following the Tiananmen Square massacre.

Though still well above the global average of 3.3%, China’s decline to 7.4% annual GDP growth—and fears of future decreases—has roiled the global economy. The International Monetary Fund now expects its growth to dip below 7% in 2015 and 2016.

Yet, this misses the story beneath the national numbers. China is likely nearing the limits of its unprecedented growth, as gains from mass urbanization and economic formalization ebb. But its economy is not monolithic and, as the pace of expansion slows, understanding where growth is happening and why is crucial for those both inside and outside China.

A recent report from the Brookings Metropolitan Policy Program and Tsinghua Center offers this ability—tracking the growth patterns of the world’s 300 largest metropolitan economies, including the 48 largest in China. Together, those metro areas are the country’s economic engines—home to 28% of the country’s 1.3 billion residents, they generate 56% of national GDP. And their economic performance continues to outpace that of the rest of the world: 40 of China’s 48 metropolitan areas are in the top 100 of global economic performance for 2014.

China’s economy is surprisingly distributed across these places. No metro area accounts for more than 4% of output. In the United States, New York City alone accounts for over 8%.

This economic dispersion is only growing. Among the 48 metropolitan areas, there are distinct pockets of growth—23 metro areas not only outperformed the global average, but also registered both employment and GDP per capita growth rates above the rest of China. These high performers were predominantly smaller economies playing catch-up, while growth in the largest metro areas lagged behind. Indeed, over the past five years, the 10 fastest growing economies have all been from this second-tier of metro economies.

Growth is also shifting geographically from coastal cities to further inland. China’s highest performing mainland metro in 2014 was Kunming, a center of manufacturing and trade in the Southeast that has benefited from government investments to increase connectivity between inland regions, more developed coastal cities, and the rest of Southeast Asia. Similarly, Chongqing, a major metro in central China whose economy is reliant on manufacturing, experienced the largest growth in per capita income, as manufacturers seek cheap labor away from coastal cities. Between just 2000 and 2014, GDP per capita in Chongqing has grown a remarkable 500%.

This economic dispersion matters.

For one, the rise of China’s second tier cities is happening as some political power has been devolved (albeit informally) to local officials. As my former colleague Bill Antholis notes, local leaders in China have been given surprising latitude for the last two decades from the central government to pursue economic growth by almost any means. “Local leaders,” Antholis writes, “are increasingly running much of China, from the bottom up.” While Beijing continues to resist true federalism within its political system, de facto federalism will likely continue to spread as the economic clout of its second-tier metro areas grows.

This growth mandate for local leaders is not without negative consequences—from over-building to corruption to environmental degradation. National officials are now focused on that center-local balance—so how provincial and regional leaders are allowed to pursue growth will continue to be critical for the long term success of the economy. Shanghai’s recent abandonment of GDP targets is a promising sign that quality of growth is becoming more important than quantity.

The rise of China’s cities, and their leadership, calls for a city-based economic engagement strategy for U.S. leaders, from the federal to the local level. The potential for city-to-city relationships is particularly strong. It’s increasingly crucial to pursue not merely a “China strategy,” but rather strategies that are targeted at peer metro areas, with similar industries and export opportunities.

Portland, Oregon’s “We Build Green Cities” program —conducted in tandem with the region’s involvement in the Global Cities Initiative, a joint project of Brookings and JPMorgan Chase—exemplifies the approach. Understanding that as developing countries grow more quickly, they will also have to grow more sustainably, leaders in Portland are targeting rapidly expanding cities for exports of sustainable services. This brought them to Changsha, a rapidly growing inland city that has prioritized sustainable development. Over this summer, mayors of the two cities signed a trade partnership that will provide access to “green” services for Changsha, while giving Portland firms a foothold in the challenging Chinese market.

As one member of the Portland Development Commission put it, “Now, when we meet with a firm that has an interest in China, our first thought will be that we have a strong partner in Changsha that can help our firm enter the market.”

Despite its slowing growth, China’s economy is still forecast to surpass the United States sometime in the next decade. Engaging is not a choice; it’s an economic imperative—China’s 48 metro areas already command a GDP of over $5 trillion. Given the right data and strategies, leaders in U.S. cities can begin to build mutually beneficial trading relationships with these places.

India

Stars are "gradually aligning" for the Indian economy and it is expected to clock a growth rate of 7.4% in the current financial year, which is likely to improve further to 8.3% by 2016-17, says an HSBC report.

According to the global financial services major, GDP growth in the first three quarters of the current fiscal year (ending March) has averaged 7.4%, y-o-y -- an improvement over the previous year and the trend is likely to continue in the coming months as well.

"We expect growth to improve from 7.4% y-o-y in FY2015 to 7.8% in FY2016 and 8.3% in FY2017," HSBC Chief India Economist Pranjul Bhandari said in a research note, "The stars are gradually aligning".

Key drivers of economic growth will be the government's push on kick-starting investments, continued reform momentum, re-starting of stalled investment projects and an accommodative monetary policy stance, Bhandari said.

On prices, HSBC said there would be continued disinflation, partly due to weaker commodity prices and the absence of demand-led price pressures.

"We expect inflation to slow further in the coming months before inching up towards the RBI's target of 6 per cent in January 2016," the report said.

According to HSBC, India's current account will be in surplus for the quarter ending March 2015 (after 32 consecutive quarters in deficit), and the deficit for the upcoming fiscal year will halve to 0.6% of GDP from 1.1% in the current fiscal year.

Japan

Japanese lawmakers' calculations show that the country's mammoth debt burden will start to worsen in less than a decade even under optimistic growth assumptions, as ultra-low interest rates begin to rise, people involved in the process said.

Prime Minister Shinzo Abe's government is struggling to meet a promise to balance the budget - excluding debt-service payments and new bond sales - by the fiscal year ending in March 2021. Policymakers have instead emphasized that strong economic growth is at least shrinking the accumulated debt as a proportion of gross domestic product.

But a fiscal-reform panel of Abe's Liberal Democratic Party will present estimates to a closed-door session that even on this optimistic basis, debt-to-GDP will start to rise after fiscal 2023/24, government and ruling coalition officials told Reuters.

Japan's gross public debt is about 240% of GDP by the broadest measure, the biggest in the world. Cabinet Office data, which compiles general accounts of the central and local governments, puts debt at 195.1% of GDP for the fiscal year that began April 1, falling to 182.6%in fiscal 2023/24.

That low now appears to be the bottom, the officials said. Even assuming growth remains robust, the new calculations assume that interest rates will eventually rise when the Bank of Japan starts to unwind its drastic monetary easing.

Philippines

The International Monetary Fund (IMF) expects the domestic economy will grow by 6.7% this year, slightly higher than previous estimate of 6.6%.

In its latest statement following the March 25 to 31 IMF Mission to the Philippines, the IMF said the 2015 growth forecast is changed a bit due to low commodity prices, higher public spending and an expected strong private construction and export expansion.

The Philippine government projects GDP will grow 7.0% to 8.0% this year, from 6.1% in 2014.

Earlier, the Asian Development Bank Outlook placed the country’s GDP growth at 6.4% in 2015.

“Inflation is projected to remain in the lower end of the BSP’s (Bangko Sentral ng Pilipinas) target range (2-4%), reflecting lower commodity prices,” noted the IMF. “The current account surplus is expected to strengthen due mainly to lower oil prices and strong inflows from business process outsourcing, tourism and remittances.”

The IMF said risks to inflation outlook will come both from external and domestic pressures.

“Disruptive asset price shifts in financial markets due to synchronous monetary policies in advanced economies remain a risk, although the Philippines’ strong fundamentals provide a cushion (while) external demand could be weaker if risks of deflation and lower potential growth in advanced economies and key emerging markets were to materialize.”

The IMF said the BSP’s preemptive policy measures implemented last year, including real estate exposures of banks, have successfully contained liquidity and credit growth, thus reducing risks to financial stability.

The IMF plans to conduct its next Philippine mission under “Article IV IMF consultation” in May.

The last mission was led by IMF official Chikahisa Sumi who met with BSP Governor Amando M. Tetangco Jr. and various other cabinet officials, as well as private sector representatives.

“Real GDP continued to grow briskly and unemployment fell in 2014. The 6.1% growth in 2014 was one of the fastest in the region, led by a strong contribution of household consumption, fixed capital formation and net exports,” the IMF said.

“While agricultural production and government spending were weaker than expected, both sectors rebounded in the last quarter of 2014. The unemployment rate fell to 6.8% in 2014 with about 1 million new jobs created, while poverty remained a challenge,” the report said.

On the domestic front, the preemptive policy moves of the Bangko Sentral in 2014 have resulted in more moderate liquidity and credit growth, reducing financial stability risks. The BSP’s generally proactive approach to oversight of the financial sector, particularly real estate exposures, provides additional support in this regard, the report said.

“On the macroeconomic policy mix, fiscal policy was contractionary with the budget deficit at 0.6% of GDP in 2014 while monetary conditions remained supportive of growth.”

“Going forward, the fiscal stance should provide a stimulus as budget execution picks up in 2015/16 toward the 2% of GDP deficit target, while monetary and macro-prudential policies continue to anchor inflation and financial stability,” the report said.

“Over the medium term, structural policy issues center around increasing investment, particularly in infrastructure and human capital. Continued efforts at enhancing revenue mobilization will be critical to address the large spending needs, including enacting measures to offset any revenue eroding policy change and preferably through a comprehensive tax reform,” the IMF added.

EUROPE / AFRICA / MIDDLE EAST

Egypt

The targeted spending on health in the fiscal year (FY) 2016/2017 budget is around 3% of the Gross Domestic Profit (GDP), while the government aims to spend 6% of the GDP on education, the Minister of Finance Hany Dimian said in an unprecedented public announcement by the government that outlined the state budget proposal.

The current budget spending is divided into EGP 42.4bn for health, compared to EGP 33.5bn in the previous budget, and EGP 94.4bn for education, compared to the previous EGP 83.6bn.

Furthermore, spending on scientific research is proposed to be 1% of GDP. The government is targeting a 4.5% to 5% economic growth in the proposed budget for FY 2015/2016 and aims to reach a 6%-7% growth by FY 2018/2019.

The proposed budget also seeks to decrease the unemployment rate by 1% to reach 11.9%, and to slide to 10% by FY 2018/2019.

Dimian said that “starting next year, the proposed draft will be publicly announced in December”.

“This will give the citizen a chance to comment on it and give his opinion,” the Finance Minister added, noting that the move is a step by the government to connect and improve communication with the Egyptian citizen.

The delay in parliament elections might affect the level of transparency, but the government is trying to take steps to ensure that this doesn’t happen, Dimian said.

“In previous years, spending on petroleum subsidies was more than the spending on education and health combined,” he added, highlighting how cuts in subsidies are necessary.

France

France's public deficit in 2014 stood at 4.0% of gross domestic product, instead of a previously estimated 4.4%, the national statistics agency says.

Meanwhile, the French economy expanded 0.4% in 2014, statistics agency Insee said, confirming the initial reading in February.

Finance Minister Michel Sapin hailed the unexpected deficit figure, saying it raised the possibility the public deficit in 2015 could stand at 3.8% of GDP instead of the 4.1% currently estimated.

The 2013 public deficit in France, the Eurozone's second-largest economy, stood at 4.1% of GDP.

Under European Union rules, members' public deficits - the difference between government spending and revenue - cannot exceed 3.0% of economic output.

France has repeatedly been above this figure and earlier in March won a two-year reprieve to get its public deficit within the bloc's limits.

Under the controversial decision - which came amid accusations bigger EU member states are treated more leniently than smaller ones - France got until 2017 to work down its deficit to 2.8%.

Meanwhile, consumer spending and the operational expenditure of the state supported GDP growth throughout the year, while investments from businesses and the state declined, Insee's figures confirmed.

Still, Insee noted that consumer spending power fell at the end of the year as income and property taxes rose.

Germany

According to provisional calculations, general government debt in Germany amounted to approximately €2.168 trillion at the end of 2014.

"The debt level thus increased by 2.0 billion on the year," the Bundesbank said in a statement.

But because gross domestic product also expanded, "the debt ratio, i.e., the level of debt in relation to GDP, decreased by 2.4 percentage points to 74.7%," the Bundesbank said.

Under EU rules, member states are not allowed to run up overall debt in excess of 60% of GDP.

The Bundesbank said that since 2010, general government debt in Germany had grown by a total of €91 billion, equivalent to 3.1% of current GDP, as a result of measures relating to the eurozone sovereign debt crisis.

"The cumulative effect of the support measures in favor of domestic financial institutions since 2008 amounted to €236 billion or 8.1% of GDP," the statement said.

Such effects decreased in the past two years, however, it said.

Under the European budgetary surveillance procedure, EU member states are obliged to submit data on their general government deficit and debt levels to the European Commission twice a year, at the end of March and end of September.

For this purpose, the federal statistical office calculates the public deficit, while the Bundesbank calculates the overall debt level.

Hungary

Budapest-based economic research company Pénzügykutató expects Hungary’s GDP growth rate to fall to 2.4% this year as investments slow. The company’s projection is well under the government’s latest forecast for growth of 2.8% – 2.9%. Hungary’s GDP rose by 3.6% last year. The firm said the budget deficit would remain under the 3%-of-GDP threshold, but achieving the 2.4% target could require cancelling budget reserves and new measures on the revenue side. Public debt is set to edge down to 76.2% of GDP by year-end from 76.9% at the end of last year. Average annual inflation is projected to reach -0.4% from -0.2% in 2014. The central bank could reduce the base rate as far as 1.60%, said Pénzügykutató researcher Éva Várhegyi.

Hungary’s government estimates GDP growth could reach 2.8-2.9% this year, Economy Minister Mihály Varga said, adding that the government’s official projection for GDP growth this year is 2.5% at present. Varga said it is not only the government but also analysts and institutions, including those critical of the government, saying that it is not unrealistic to expect around 3% GDP growth and the risks seen for 2015- 2016 tend to be positive rather than negative for Hungary.

Meanwhile Hungary’s National Bank (MNB) raised its forecast for 2015 economic output growth to 3.2%, the main figures of its fresh quarterly Inflation Report showed. The GDP forecast is sharply up from the 2.3% growth forecast in the previous report published in December. The bank also cut sharply its forecast for inflation in 2015, now expecting consumer prices to stagnate this year rather than increasing on average by 0.9% as projected in December. This might be one of the reasons why MNB’s rate setters cut the base rate by 15 basis points to 1.95%.

Ireland

Ireland's central bank recently nudged up its 2015 economic growth forecast on higher exports and consumer spending, saying gross domestic product would expand 3.8% rather than the 3.7% forecast earlier.

Ireland's economy has rebounded strongly since it exited an EU-IMF bailout in late 2013, and gross domestic product grew by 4.8% last year, the fastest expansion in the European Union.

In its quarterly review of the Irish economy, the central bank said it expected personal consumer expenditure to increase by 2.2% in 2015, while exports of goods and services will grow 5.7%. It cut its forecast for unemployment at the end of 2015 to 9.8% from 10.4%.

"The momentum of recovery in the Irish economy continues to build and broaden, with domestic demand now making a significant positive contribution to growth," the bank said.

Turkey

Turkey's gross domestic product (GDP) expanded by 2.6% in the final quarter of 2014, resulting in 2.9% full-year growth, the Turkish Statistical Institute (TurkStat) said in a statement recently. Turkish economy succeeded in growing continuously for 21 quarters, and the announced growth rate for 2014 was above market expectations, which was around 2.7% average.

GDP increased by 2.9% in 2014 and reached TL 126 billion at constant prices. At current prices, however, it increased by 11.6% and reached TL 1.750 trillion. In contrast, Turkey's growth rate was 4.1% in 2013 and 2.2% in 2012.

Final household consumption expenditures increased by 1.3%, final government consumption expenditures increased by 4.6% and exports of goods and services increased by 6.8%, whereas imports of goods and services decreased by 0.2%.

Deputy Prime Minister in charge of economy, Ali Babacan, released a press statement that indicated the 2014 growth was limited by global market volatility, geopolitical developments and bad weather. Babacan emphasized that structural reforms, which were announced by the government as Primary Transformation Programs, will increase Turkey's growth potential and reduce its economic vulnerabilities.

Bad weather in 2014 limited growth and narrowed production, which decreased by 1.9%; however, the industry and service sectors supported the economy by increasing 3.5% and 4%, respectively.

Economists are discussing a new economic model for Turkey to push growth. Speaking to Daily Sabah, economist Cemil Ertem said that Turkey needs pro-growth reforms. Moreover, he said the government's primary transformation programs should be implemented immediately.

Finance Minister Mehmet Şimşek stressed that the government estimates that growth will speed up with increasing political and financial predictability. The government was targeting a 3.3% growth rate, which was announced with the medium-term economic program in October. Highlighting the realized growth rate, Şimşek said that 2.9% is below targets as a result of weak progress by global economies. He further emphasized in his written statement that Turkey showed good performance despite the ongoing stagnation in the EU, the biggest trade partner of Turkey, geopolitical conflicts and financial uncertainties.

The government does not expect a better rate for the first half of 2015, but it maintains high hopes for the second half of the year. The domestic market had contributed 0% to the growth rate according to Economy Minister Nihat Zeybekci. Last week, he said the growth will not satisfy expectations, and that the figures for the first quarter of 2015 will not be as expected either. Şimşek also said that consumption and investments were postponed in the beginning of 2015 because of financial fluctuations; however, he added that growth will speed up with a more stable environment.

United Kingdom

Britain leaving the European Union could result in a permanent loss of 2.2% of the country's gross domestic product by 2030, and the costs would not be offset solely by striking a free trade deal with its former partners, think tank Open Europe said.

The prospect of Brexit - Britain breaking away from Brussels - has moved up the political agenda in tandem with a surge in support for anti-EU party UK Independence Party (UKIP) in recent years.

The Conservative Party, which has long contained a wing skeptical about the European Union, has promised an in-or-out referendum on membership before the end of 2017 if they win national elections on May 7 in a move designed to neutralize UKIP's appeal.

UKIP has said it would only support a minority Conservative government if it agreed to hold a referendum before Christmas.

The Labour Party, which is level with the Conservatives in the polls, is committed to Europe, but wants its institutions reformed, while the Liberal Democrats, currently in coalition with the Conservatives, are strong pro-Europeans.

Think tank Open Europe said that Britain's GDP would suffer if it failed to strike a free trade deal with Europe from outside the EU, and also did not pursue a free trade agenda with the rest of the world. This could result in a drop in GDP of 2.2%.

The best case scenario would involve a free trade agreement with Europe, very ambitious deregulation of its economy and open up almost fully to trade with the rest of the world.

That would result in GDP being 1.6% higher in 2030 than if the country stayed in the EU, but it would involve exposing British workers to increased competition from low-cost countries.

The most likely outcome was between a 0.8% permanent loss to GDP, where the UK strikes a comprehensive trade deal with the EU but does nothing else, and a 0.6% gain, where it pursues free trade with the rest of the world and deregulation in addition to a free trade agreement in Europe, it said.

"Transforming Britain into the deregulated, free trading economy it would need to become outside the EU sounds easy in theory, but in practice would come up against some serious political resistance within the UK itself," said Open Europe chairman Rodney Leach, a Conservative lawmaker.

"The worst scenario is if the UK leaves the EU and then pursues protectionist policies."

Ukraine

A third of Ukraine’s gross domestic product lies in the Donetsk and Lugansk People’s Republics, Ukrainian Interior Ministry Arsen Avakov said.

"It is difficult to speak about reforms when 30% of GDP has been left in the territories [of the self-proclaimed republics - Ed.]. It is difficult to speak about reforms when society is engulfed by military operations in the east," Avakov said at the Stress Test expert forum, TASS reported.

Ukraine’s eastern industrial base is a large chunk of the country’s GDP, about 16% according to Investment Capital Ukraine. Lugansk and Donetsk regions account for 25% of industrial goods and services. Many of these industries, such as coal mining and energy, have been shut down due to the conflict.

The loss of key industries in the country’s eastern province is worrying for Ukraine, a country already on the brink of financial disaster as the war drags into a second year.

Between lost industry and war expenses, the conflict between pro- and anti-government forces has already wiped out 25% of Ukraine’s economy in the first 3 months of 2015. Finance Minister Natalia Yaresko has said 30% of next year's budget would be spent on defense and debt obligations.

Ukraine’s economy shrank 6.8% in 2014 and is expected to contract another 5.5%, according to the IMF’s latest forecast. At the end of 2014, the country’s GDP was 1.5667 trillion hryvnia, or about $121 billion. The Standard & Poor’s ratings agency forecast Ukraine’s GDP will shrink to $99 billion in 2015, and in a worst case scenario put forward by the Economist to $70 billion.

When calculating the country’s GDP in 2014, Ukrainian officials excluded Crimea, that reunited Russia in 2014, or the Donbass conflict area.

During the coming year, Ukraine will receive an additional $10 billion from the International Monetary fund, part of a $17.5 billion recovery plan, and bringing total aid to around $40 billion. The first tranches of money will be used to prop up the country’s beleaguered currency and foreign reserves. The Ukrainian hryvnia has lost 60% of its value in the last year and has dropped to 23.44 to the dollar, far weaker than the 21.75 per dollar limit envisioned by the IMF.

Foreign currency reserves stood at $5.6 billion at the end of March, compared to the $36 billion level in 2011. The lack of foreign currency reserves, among other factors, guided Moody’s ratings agency to slash Ukraine’s sovereign debt rating to one level above junk status.

Ukraine is asking foreign bondholders - from the Russian government to American hedge funds- to agree to a $15.3 billion debt restructuring plan, which in short, would mean debt forgiveness.

McIlvaine Company

Northfield, IL 60093-2743

Tel: 847-784-0012; Fax: 847-784-0061

E-mail: editor@mcilvainecompany.com

Web site: www.mcilvainecompany.com