And first quarter GDP — which had been shown to have contracted at a 2.9 % annualized rate, a slip mostly attributed to unseasonably bad weather — was revised from new data to have only contracted at 2.1%.

So, strong second quarter growth more than made up for the first quarter setback, setting the stage for strong overall 2014 growth and a continued recovery

Chile

Chile's gross domestic product rose by 1.9% in the second quarter compared with the same period a year earlier, with a number of sectors posting weaker growth, according to the central bank.

The result was in line with the consensus forecast and confirms that economic growth in Chile is easing. The economy expanded by 4.1% last year.

In the first half of the year, the economy expanded by 2.2%, the Central Bank of Chile said, adding that in seasonally adjusted terms, the economy expanded by 0.2% in the second quarter compared with the first quarter of the year.

Apart from fishing and the electricity, gas and water sector, the rest of the economy posted a weak performance in the second quarter, especially in key activities such as manufacturing and mining.

Domestic demand fell by 0.9% in the second quarter compared with the same quarter a year earlier, reflecting a decline in investments, the central bank said. Investments fell by 8.1% in the quarter.

Investments have been especially weak in the mining sector, which is a key engine of growth. Chile is the world's largest producer of copper.

The United Nations' Economic Commission for Latin America and the Caribbean estimates that Chile's economy will expand by 3.0% this year.

Chile's central bank cut its monetary policy rate by 0.25 percentage point to 3.5% last week, aiming to boost growth, and economists expect more cuts could be on the way.

"We think that the central bank will continue to cut the monetary policy rate in the next two policy meetings by 25 basis points in each meeting," Credit Suisse said in a report.

The central bank also reported that exports in the second quarter reached $19.77 billion, while imports were $16.79 billion.

Mexico

Mexico’s gross domestic product fell less-than-expected in the last quarter, according to official data.

Mexican GDP 1.6% vs. 1.5% forecast. In a report, Insituto Nacional de Estadistica Y Geografia said that Mexican GDP fell to a seasonally adjusted 1.6%, from 1.8% in the preceding quarter.

Analysts had expected Mexican GDP to fall to 1.5% in the last quarter.

Virgin Islands

The territory's 2013 Gross Domestic Product was recently released, showing an overall drop by 5.4% compared with 2012.

The drop is less of a decrease than the year before, when the GDP fell by 13 percent compared with the prior year.

The main source of the decline continues to be HOVENSA's closure in early 2012, according to government officials.

"The petroleum refining is the big driver in the numbers," Bureau of Economic Analysis Acting Director Brian Moyer said.

If the oil refinery was not a factor, the territory would have seen a 0.6% growth, he said.

2013 GDP

The territory's total GDP for 2013 is $3.79 billion, down 5.4% from $4.14 billion in 2012.

By comparison, the national GDP - which does not include data from the U.S. territories - grew by 2.2% in 2013, according to Moyer.

The decline in the territory's GDP is attributed to two things, the drop in refined oil exports after the closure of HOVENSA and a reduction in consumer spending in the territory, Moyer said.

"If you remember, it was a difficult year for consumers," he told The Daily News. "Compensation fell, but consumers faced higher prices."

The report did contain some good news: Moyer said 2013 showed positive growth in the areas of tourism and rum production.

In 2013, visitor arrivals increased 2.2% and rum exports increased 22%, which helped keep the GDP from falling more, he said.

"That is a bright spot," Moyer said.

The report also shows a 3.6% drop in government spending, partly because of the government's tighter budget constraints, but mostly because the federal stimulus funding awarded to the territory in 2009 has ended.

V.I. Bureau of Economic Research Director Wharton Berger said the report demonstrates just how much the territory's economy has changed in recent years.

"Things have changed. The economy has changed. We are relying more on the private sector," he said. "The government would like to work more with the private sector to facilitate growth here in the territory."

Revisions to past GDP

The 2013 GDP report included revisions to the 2010, 2011 and 2012 reports. The revisions were made using updated data sources, including revised gross business receipts from the V.I. Bureau of Internal Revenue, new territorial spending reports from the V.I. government and results from the 2012-2013 visitor exit survey.

The revisions are very close to the preliminary data, according to Bureau of Economic Analysis Project Manager Aya Hamano.

"The story hasn't changed," she said.

In 2011 and 2012, the territory's GDP dropped significantly, reflecting the recession and the closure of the HOVENSA refinery.

ASIA

Hong Kong

Hong Kong's economy shrank for the first time in three years in the second quarter as private consumption weakened, prompting the government to cut its full-year growth forecast.

Gross domestic product for the three months ended June 30 contracted 0.1% from the first quarter on a seasonally adjusted basis, reversing a 0.3% growth in the first quarter, the city's government said. The mild contraction is in line with the median forecast of five economists polled earlier by The Wall Street Journal and marks the first contraction since a 0.4% decline in the second quarter of 2011.

Second-quarter GDP expanded 1.8% from a year earlier, slower than the first quarter's 2.6% growth and lower than the median forecast of a 2.0% expansion in The Wall Street Journal's poll.

Hong Kong's weaker second-quarter GDP data prompted the government to cut its 2014 growth forecast to a range of 2% to 3% from 3% to 4%. The city's economy grew 2.9% in 2013.

Private consumption, which accounts for two-thirds of the city's GDP, lost steam in the second quarter and become the main drag of the economy, contracting 0.9% from the first quarter. The contraction compares with a 0.6% expansion in the first quarter and 1.8% growth in the fourth quarter of 2013.

Despite the weaker GDP reading, Hang Seng Bank senior economist, Ryan Lam, said isn't likely to enter a technical recession, which is typically defined as two consecutive quarters of GDP contraction.

"The second quarter is not the beginning of a downturn," said Mr. Lam, adding that the slowdown is only temporary.

"We remain hopeful of an export turnaround in the second half as growth in developed markets and mainland China picks up," said Mr. Lam, who expects the city's GDP to grow 2.8% in 2014.

India

Reserve Bank of India has projected around 5.5% GDP growth for 2014-15 after two painful years of sub-5% growth, as the new government focuses on fiscal consolidation and is taking steps to clear stalled industrial and construction projects to shake up a stagnating economy.

This is in line with the projections made at the start of 2014-15 and RBI is now looking at the prospect of a sustainable 7% growth in the medium term if the government takes the reforms process forward in the areas of industry, services, international trade, labor markets, public sector management and financial markets.

"The Indian economy stands at crossroads that could take it from a slow bumpy lane to a faster highway," RBI said in its annual report for 2013-14.

There are signs of improvement in mining, manufacturing and construction activity while availability of financial resources to private sector has increased ensuring flow of funds to productive purposes. An improved external demand and stabilizing global commodity prices are also expected to support recovery.

Mining, manufacturing, construction and trade, hotels, transport and communication sectors account for half of the GDP.

RBI said that the economy could grow in the range of 5 to 6% in 2014-15 with risks broadly in balance around the central estimate of 5.5%. However, deficiency in rainfall during the 2014 monsoon season and geopolitical tensions in the Middle East can play a spoilsport.

"With greater political stability and a supportive policy framework, investment could turn around. The economy is poised to make a shift to a higher growth trajectory," RBI said.

Stability in the foreign exchange market with softening of global crude oil prices is also a comforting factor to the government and is conducive to growth. Industrial Production (IIP) growth is beginning to look up, while inflation on an average has been lower than in the corresponding period of the previous year.

After remaining above 8% during April-May 2014, consumer price index moderated to 7.5% in June 2014 due to favorable base effect. However, it rose to 8% in July 2014 as prices of vegetables grew on the back of lack of rains till July.

The disinflationary momentum that set in since December 2013 has taken inflation to a lower trajectory, broadly in line with RBI's projections. However, downside risks to growth and upside risks to inflation arise from the sub-normal monsoon and the geopolitical situation in the Middle East

India faced an 18% deficiency in rainfall till August 13, 2014 as against an excess of 12% in the corresponding period last year. However, the situation improved dramatically since mid-July when the deficiency was 43%.

Even if the rainfall is normal in the rest of the monsoon season, some rainfall deficiency will stay. "However, its adverse impact on growth, inflation, fiscal and trade deficits is expected to be small," RBI said.

Japan

Private think tanks have cut their estimates for Japan’s gross domestic product for fiscal 2014 after the economy reportedly shrank at its fastest pace in 13 quarters in April-June.

Japan’s price-adjusted real GDP will grow only 0.5% in the year ending next March, the 11 think tanks say, compared with the 1.2% projected by the government and 1.0% by the Bank of Japan.

All reduced their previous estimates, made in June, after the GDP plunge was reported last week. The revision reflected the pullback in personal consumption that followed a surge to beat the consumption tax hike to 8% from 5% in April.

The Cabinet Office reported on Aug. 13 that Japan’s real GDP shrank at an annual rate of 6.8% in the first quarter of the fiscal year.

The think tanks were divided, however over the future course of personal consumption in Japan.

“The worst is over, and personal consumption will recover moderately,” said Mitsumaru Kumagai, chief economist at the Daiwa Institute of Research Group, while Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co., said it is difficult for consumption to return to the levels seen before the tax hike, chiefly because real incomes are continuing to decline under “Abenomics.”

Among the 11 think tanks, Nomura Securities Co. presented the brightest growth forecast of 0.9% for fiscal 2014, while the Mitsubishi Research Institute was most pessimistic, with an estimate of 0.2% growth.

On average, the think tanks project that Japan’s real GDP will expand at an annual rate of 4.2% in the July-September quarter and maintain annualized growth of nearly 2% in the following quarters.

For fiscal 2015, the think tanks project growth of 1.3%, assuming the planned consumption tax hike to 10% in October 2015 will be executed and that exports will recover.

The growth projected is lower than the government’s forecast of 1.4% and the BOJ’s forecast of 1.5%.

The rosiest growth rate, 1.8%, was forecast by Nomura, while the most pessimistic outlook, 1.0 percent, came from the Norinchukin Research Institute.

Malaysia

While economists are mostly on the same page about upgrading their full-year economic growth forecast for Malaysia following two quarters of spectacular performance, their opinions on the next interest rate hike are divided.

Of the 12 economists polled by StarBiz, five reckon that Bank Negara would raise the overnight policy rate (OPR) by 25 basis points (bps) to 3.5% at the next Monetary Policy Committee (MPC) meeting, while one believes the next rate hike could happen either in September or at the final MPC meeting for the year in November.

The other six economists believe that Bank Negara would keep the OPR at 3.25% through 2014, after having raised it by 25 bps for the first time since May 2011 last month.

The group of economists who believe that a second round of rate hike is necessary in September based its argument on the need to address the negative real interest rate situation in Malaysia, strengthen financial stability and further anchor inflationary expectations.

CIMB Investment Bank economist Julia Goh, for one, said: “We think that another 25-basis-point rate hike will help to ensure that the average real rate of return on deposit growth remains positive over the medium to long-term period.

“Lingering inflation risks, financial imbalances and strong growth provide room for Bank Negara to raise rates next month,” Goh told StarBiz in an email.

Nomura Research economist Euben Paracuelles, who shared Goh’s sentiment, pointed out that inflation in Malaysia, which was already at elevated levels, was set to rise further, especially upon the implementation of the goods and services tax (GST) in April next year, and this, he noted, would likely push real policy rates further into negative territory.

“Left unchecked, this could fuel more concerns over financial stability, especially if growth remains robust,” Paracuelles explained in his report. “We note that Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz had already described the first-quarter growth as ‘exceptional’, yet the second-quarter growth was even stronger.”

Malaysia’s gross domestic product (GDP) in the three months to June 2014 grew 6.4%, the highest pace in six quarters, and beat market expectations, thanks to strong export growth and robust private domestic demand.

In the first quarter of the year, the country’s economy expanded 6.2%.

The strong numbers lifted Malaysia’s GDP growth for the first six months of 2014 to 6.3%, compared with 5.5% in the corresponding period last year.

According to Bank Negara, the country’s inflation rate is expected to average around 3%-4% this year, but the implementation of the GST next year would push up the inflation rate temporarily. Malaysia’s inflation rate, as measured by the annual change in the consumer price index, stood at 3.35% in the first half of the year.

Meanwhile, economists who believe that Bank Negara would unlikely raise the OPR again at least until the first half of 2015 were of the opinion that Malaysia’s inflation rate was manageable.

They argued that the rate hike in July was sufficient for the moment to gradually address the financial imbalances in Malaysia, and that a second round of rate hike would only weigh on the country’s domestic demand and external sector, and hence, economic growth.

According to AmResearch economist Patricia Oh, the recent OPR hike, coupled with other macro-prudential measures, would help to ensure that Malaysia’s household indebtedness remains in check.

M&A Securities head of research Rosnani Rasul, on the other hand, pointed out that Bank Negara had in its latest monetary statement said the current rate was conducive for the country’s economy.

Rosnani noted in her report that there was no good reason for Malaysia to adjust its policy rates again until next year, as the country’s interest-rate differential against the United States was still at a comfortable level, and that the latter was unlikely to make any policy adjustments soon.

“Further upward adjustment in the OPR this year will only strengthen the ringgit, and that will choke export performance,” she argued.

Divided views on the next OPR hike aside, economists have raised their growth projection for Malaysia’s economy this year. This was in line with Zeti’s statement that the country’s GDP growth in 2014 would likely exceed Bank Negara’s forecast range of 4.5%-5.5%.

Based on StarBiz’s poll of economists, the average forecast for Malaysia’s GDP growth this year has been revised up to 5.8%, with three economists projecting growth to reach as much as 6% this year.

While economists concurred that the country’s growth in the second half would moderate, they believe that domestic demand, especially private investment, would remain robust and the exports sector would continue to grow amid the ongoing recovery of the global economy. These factors, economists said, would support Malaysia’s economy through 2014.

“Although domestic demand growth will likely moderate in the second half, dampened by slowing government spending due to the fiscal consolidation drive and curbs on the property market, it will likely remain resilient and act as the main anchor of growth during the year,” RHB Research chief economist Peck Boon Soon said in his report.

“We expect consumer spending to hold up and private investment to remain relatively strong amid elevated price pressures,” he added.

Thailand

Thailand's economy recovered in the second quarter as political stability returned to the country, helping to boost consumption while the military government implemented fiscal-stimulus measures.

Second-quarter gross domestic product grew 0.4% year-over-year and 0.9% from the previous quarter on a seasonally adjusted basis, the National Economic and Social Development Board reported. Thailand hasn't reported annualized quarterly GDP since the country was hit by heavy flooding in 2011, which affected the comparison base for economic growth. The improvement in GDP comes after the economy shrank a revised 0.5% year-over-year in the first quarter.

The improvement "confirms the stabilization in economic activity that monthly private consumption and investment indicators have suggested as the political outlook turns constructive," said Weiwen Ng, an economist at ANZ in Singapore. Private consumption increased 0.2% year-over-year in the period.

Investment is also improving, but is still weak due to overcapacity. Total investment declined 6.9% in the second quarter compared with a 9.3% contraction in the preceding three months.

The economic board revised downward its 2014 GDP growth estimate slightly, to 1.5%-2% from 1.5%-2.5%. Thailand's economy contracted 0.1% in the first half of this year as tourist arrivals fell 9.9%. Tourism is a major driver of the economy and accounts for about 10% of the country's GDP.

"The downward revision is largely attributed to external factors that also affected Thailand's exports, which only recorded a marked recovery in June," said Arkhom Termpittayapaisith, the economic board's secretary-general.

Thailand's exports grew 0.4% in the second quarter after four consecutive quarters of contraction, official data showed. The board now predicts exports will grow 2% in 2014, though a downward revision from its earlier projection of 3.7%. The country's exports contracted 0.2% in the whole of 2013.

"In the latter half of 2014, while it remains to be seen whether the economy will show a V-shaped recovery recently, domestically, the coup has restored consumer confidence and business sentiment, in a seemingly calm situation, with government spending returning to normal," said Tim Leelahaphan, an economist at Maybank Kim Eng in Bangkok.

Months of street rallies and social unrest came to an end in May when army chief Gen. Prayuth Chan-ocha seized power. Boosting the economy has been one of the main challenges for the military government, which disbursed $2.7 billion in overdue payments to rice farmers under a controversial subsidy program and approved a $75 billion infrastructure development plan. The government hopes to achieve economic growth of 4% during the second half of the year and 2% for the whole of 2014. Thailand's economy grew 2.9% in 2013.

EUROPE / AFRICA / MIDDLE EAST

Belgium

Belgium’s gross domestic product rose less-than-expected in the last quarter, official data showed.

In a report, Statistics Belgium said that Belgian GDP rose to a seasonally adjusted 0.1%, from 0.4% in the preceding quarter.

Analysts had expected Belgian GDP to rise 0.3% in the last quarter.

Eurozone

The euro-zone economy stalled in the second quarter, raising the ugly prospect that the region's meager recovery has lost momentum just as it faces fresh headwinds from Russia and Ukraine.

Germany's economy, long Europe's growth engine, shrank for the first time in more than a year, a development economists largely attributed to a mild winter that boosted activity in the first quarter at the expense of the second. The bigger concerns, they say, are France and Italy, where respectable rates of growth aren't even in sight.

"The euro-zone recovery never really got going, and now it appears to be petering out," said Simon Tilford, deputy director of the Centre for European Reform, a nonpartisan London think tank.

The gloomy numbers out of the euro zone—whose roughly $13 trillion economy accounts for 17% of the world's gross domestic product—join a litany of similarly sour reports this week from Asia, all pointing to signs of sudden weakness among many major economies.

The downturns in Europe and Asia come as the U.S. flashes signs of increasing economic vigor after a brief chill earlier this year. The U.S. economy grew in the second quarter by an annual rate of 4%, thanks to stronger consumer spending and corporate investment. Despite tepid wage gains, U.S. firms have been on the strongest sustained hiring stretch since 2006, adding more than 200,000 jobs each month since February.

But the growing sense of optimism in the U.S. contrasts with deepening uncertainty in many other parts of the world.

Mexico's central bank lowered its growth forecast for 2014 to 2.4% from 2.8%. Japan reported a sharp contraction in the second quarter as output fell 6.8% in the wake of an April increase in the country's sales tax. Japan's slow recovery, despite heavy stimulus, is in part the result of surprisingly weak exports—a condition that stems from soft demand elsewhere in the world and shows how weakness can spread among economies.

In China, the central bank reported that the broadest measure of new lending had plunged by two-thirds in July from the previous month, setting off alarm bells that the world's second-largest national economy might be heading for a hard landing.

It is possible such sluggishness is temporary—July is often a down month for credit and June's credit growth had been exceptionally strong. Even so, the figures suggested that several months of "mini-stimulus" spending on infrastructure, transportation and information technology, as well the central bank's injections of cash into China's financial system, hasn't done much to lift the economy.

Over the past year, the euro zone's economy expanded just 0.7%—too slow to reinvigorate investment and job creation or to escape the legacy of heavy public and private debts in many countries.

German GDP shrank an annualized 0.6% from the first quarter, and Italy's output fell, too. The French economy, the bloc's second largest behind Germany, was largely flat for a second straight quarter. Spain and the Netherlands posted some growth, but not enough to offset weakness in the economies of their larger peers. Nerves over Europe's outlook helped cause the yield on Germany's 10-year bond, considered a haven, to dip below 1% for the first time.

Germany's weak second quarter is widely seen as a hiccup: the country is enjoying record-high employment, rising wages and ultralow borrowing costs. A return to growth is expected in the current quarter. Germany's Bundesbank, which has considerable influence over the country's public opinion, made the unusual move of responding to the recent data with a statement from its economists, saying the trend "remains pointed upward."

However, the continued sluggishness of business investment, despite cash-rich corporations, is a puzzle that bodes ill for Germany's ability to lift euro-zone growth. Averaging out the last two quarters, which evens out weather-related swings in construction, Germany still only grew at a pace of about 1% in the first half. And that was before the crisis in Ukraine intensified last month, leading to growth-draining sanctions imposed by the U.S. and EU against Russia.

"We're seeing the crisis worsen in Ukraine and Russia as well as a difficult political situation in the Middle East," Kasper Rorsted, chief executive of German consumer products company Henkel AG HEN.XE +1.17% said in an earnings call. "The situation remains volatile, and we don't see it changing any time soon."

France's problems are rooted more deeply, in tight fiscal policies and long-unreformed markets. The country's unemployment is at all-time highs. A shrinking construction sector is making things worse, forcing entrepreneurs like Patrick Liébus to resort to innovative strategies to keep people on the job.

Mr. Liébus has sent employees at his roofing firm in southeastern France on a three-week vacation instead of two this August as he doesn't have enough work for them. "After that there's no vacation left—it's temporary layoffs or redundancy," he said.

Some of France's largest companies are also feeling the pinch. Construction and concession giant Vinci SA said earlier this month it would record a slight decrease in revenue this year as it warned the upturn in France's building market hadn't yet materialized.

European policy makers have hoped that the recovery would gather steam of its own, so that they don't have to experiment with controversial stimulus measures, including money-printing by the European Central Bank or large-scale government investment spending.

Many economists, as well as European governments, forecast recovery will resume in the third quarter and strengthen by 2015. Business surveys such as the purchasing managers’ index imply faster GDP growth than recorded so far—an anomaly that optimists say will be corrected this fall.

But deeper worries loom, too. With each additional quarter of near-zero growth, the bloc's vulnerabilities—weak productivity, a stagnating labor force and fragile banking system—become more firmly entrenched. That could make the bloc resistant to stimulus from fiscal or monetary policies, a problem that has gripped Japan for years.

"Our view is that temporary factors dampened growth in the first half of 2014, and this will reverse itself in the third quarter," said Marco Valli, chief euro-zone economist at Italian bank UniCredit.

Mr. Valli said two risks threaten the outlook, however: Geopolitical and trade frictions between the EU and Russia could hurt euro-zone business sentiment; and the slowdown in global trade and emerging-market growth could hit European exports.

Japan is the first modern economy to slip into persistent consumer price declines known as deflation—a condition some European countries now seem perilously close to entering. Japan's 18-month-old stimulus experiment is the first test of a country attempting to wrench itself out of a deflationary slump.

"We should not wait until we all become Japan, we should act now," said Paul De Grauwe, professor at London School of Economics. He recommends a two-pronged approach with massive stimulus spending by governments—particularly in Germany, France and other countries that can borrow cheaply—buttressed by ECB purchases of public and private debt to increase the money supply.

But the ECB has shown little appetite for such measures beyond the cheap bank loans and record-low interest rates it has already enacted. It argues that overhauls aimed at making economies more competitive are the answer to Europe's problems.

Last week, ECB President Mario Draghi berated governments for their lack of progress on such reforms. "There are stories of young people who tried to open their business, and it takes eight to nine months before they can do so," he said. "That has nothing to do with monetary policy."

Israel

War is supposed to be “good” for the economy, according to some experts, by boosting government spending — but that hasn’t happened in Israel’s conflict with Hamas in Gaza. The travel industry is in a shambles, tourism’s summer high season is ruined, and much-needed work isn’t getting done because 50,000 reserve soldiers, most of them members of the workforce, are otherwise occupied on the front lines. This is in addition to the expense of the war itself.

It was inevitable that the war would have an impact on the economy, according to Psagot Investment House. In its report, the group put the cost of the war at a quarter of a percent of what had been an expected 2.9% growth in GDP for 2014. Taking into account the losses to business, the expenses the government is facing, and the cost of repairing the economic damage, the report bumps down the expected growth rate for Israel for the year to 2.4% – taking into account the possibility that the war will last for another week and a half. If it goes longer, Psagot said, it may have to revise its figures again.

Even so, Psagot predicted the losses would be temporary.

The group made its assessment on the basis of another “summer war” — the Second Lebanon War, which took place during July and August of 2006. The war also hurt tourism and required extensive resources to repair buildings that were damaged by Hezbollah rockets. Iron Dome, which has spared lives and property this time by intercepting incoming rockets, had not been invented yet. While far fewer buildings have been damaged in the current war, Psagot said, that “gain” is wiped out by the fact that life in many more cities in the center of the country are being affected in many ways by Hamas rockets. Hezbollah was unable to reach farther south than Hadera, while Hamas rockets have hit Tel Aviv and well to the north.

Besides tourism, the report said, the service sector has been badly affected by the war. “Personal consumption is down significantly, but the service sector will be more affected long-term than the retail sector,” the report said. “Families and individuals are putting off discretionary purchases, but at the end of the war, retail purchasing is likely to bounce back as people release a pent-up desire to spend,” the report said. “However, spending on services is usually stable and does not increase after a period in which it was depressed. People may buy two shirts to make up for lack of purchases during the war, but they will probably not go to two movies.” By the end of the war, Psagot expects personal spending to be down by as much as NIS 1.7 billion (about $500 million).

Tourism, of course, has been badly hurt by the war, and unlike personal spending, tourism losses are likely to persist long after the fighting ends. “It’s likely that tourists will need some time to feel that getting a taste of Israeli falafel is worth the risk of traveling here,” the report said. Losses to the travel industry are likely to reach NIS 3.5 billion ($1 billion), the report said.

One bright spot, at least as far as spending goes, is in public consumption, the report said. The government will be paying the salaries of some 50,000 reserve troops for at least a month, as well as transferring compensation payments to businesses and individuals affected by the war. In addition, the IDF will need to spend more money than it expected in order to acquire replacements for the equipment and materiel used in the war effort. That, along with outlays for personnel expenses, is likely to boost government spending by NIS 2.6 billion ($760 million). Generally, exceptional government expenses are paid for by taxes, budget cuts, or both, but the report did not speculate about where the government would get the money it needs.

One economic beneficiary of the war is the supermarket, selling more food as Israelis “nest,” staying at home near their safe rooms instead going out and spending money at malls, restaurants and movies.

Adding up the numbers, Psagot said, Israel is likely to expend NIS 2.6 billion, or 0.25% of its GDP, on the war. While the sum is not insignificant, it concluded, the losses were likely to be temporary, and the country’s growth in the 12-18 months after the war should make up for any losses.

Germany

The European Union's new rules for calculating GDP come into effect Sept. 1 and include revenue from prostitution, drugs and weapons trading. The new standards could also make debt levels seem lower than they really are.

What do research and development, prostitution, drug smuggling and arms trafficking have in common? They are all seen as economic activities, and starting Sept. 1, they will be counted as part of Germany's annual economic performance, or gross domestic product, in line with new calculation standards.

The new figures include revenues from prostitution and the sale and smuggle of illegal drugs.

"All relevant economic activities should be counted without any moral judgement," Norbert Räth from Germany's statistical office, Destatis, told DW.

According to official estimates, there are around 400,000 prostitutes in Germany, 20,000 of whom are men. Altogether they earn 14.6 billion euros ($19.5 billion) a year. Minus various expenses, such as rent in brothels, work attire and condoms, and the statisticians get a gross value added of roughly 7.3 billion euros.

For drugs, it is the same story. Surveys commissioned by the Federal Health Ministry allow officials to estimate the prevalence of drug use in Germany. This figure is then multiplied by the respective prices on the black market - something Germany's Federal Criminal Police Office knows very well.

Even the amount of money the state spends on armaments is now subject to the new rules.

"The production of weapons has, of course, always been included," Räth said.

But until now those costs had always been written off as a state expense. Now they are considered an investment.

Now countries in the EU have a uniform method of calculating their GDPs. And when new items are added to GDP calculations, it grows.

One could speculate that there is an ulterior motive behind the new system, namely one that sugarcoats Europe's sovereign debt. Even if overall debt is not reduced, the debt ratio sinks when GDP increases.

"We are going to have to categorically deny that," said Norbert Räth from Germany's statistical office, Destatis. "The whole process is not politically motivated. It hasn't been all along."

For Räth, who is responsible for calculating Germany's GDP, the primary concern is establishing an international comparison of data.

"There have been no political impulses," Räth said.

The new calculation methods have, in fact, been a matter of discussion at the United Nations since 2003. In 2008, the new System of National Accounts (SNA) was introduced.

Australia was the first to implement it, while the United States calculates its GDP according to rules adopted in July 2013. In the European Union, France and the Netherlands do their math according to the new standards. From Sept. 1 on, all EU countries will be required to adhere to the same standards.

The new rules are hardly suited to sugarcoat Europe's debt level. Wolfgang Nierhaus from the Ifo Institute in Munich, Germany, did the math based on figures from the year 2011.

"Regarding public debt ratios, this would reduce the EU average by 1.9 percentage points," Nierhaus said.

In Germany, the rate would drop by 2.3 percentage points from 80 to 77.7 percent of GDP. Such a change would likely be described as "marginal," according to Nierhaus.

The new rules also apply to the calculation of expenditure on research and development. Previously, these were regarded as advance payments that more or less disappear during production. Now companies are obligated to record what they spend on research and development as an investment.

Experts have been calling for this to happen for a long time, because research and development are, in fact, investments in the future - something that will represent the largest chunk in the new GDP calculations.

"I can't give you a concrete number," Räth said. "We will publish one soon. But overall the level of domestic product could rise by around 3 percent, or 80 billion euros."

"Of that number, three-quarters come from the new standards for counting research and development," he added.

Italy

Italy’s economy unexpectedly shrank in the second quarter, falling back into recession and extending a slump that’s lasted most of the past three years.

Gross domestic product fell 0.2% from the previous three months, when it declined 0.1%, the national statistics institute Istat said in a preliminary report in Rome. That compares with the median forecast of a 0.1% expansion in a Bloomberg survey of 22 economists. Output was down by 0.3% from a year earlier.

“A lack of re-stocking and poorer-than-expected exports seem good candidates to explain the surprise,” said Paolo Pizzoli, an economist at ING Bank in Milan. Domestic demand excluding inventories was probably “only mildly up,” he said.

Italy’s GDP has been dropping for the last three years, with the only exception of the last quarter of 2013, when it posted a 0.1 increase.

With Italian youth unemployment at more than 40% and sovereign debt of about 2 trillion euros ($2.7 trillion), Prime Minister Matteo Renzi is under pressure to quickly turn around the euro region’s third-biggest economy. Lower than-expected growth may undermine his plans to bring the country’s deficit-to-GDP ratio to 2.6% this year and start reducing Europe’s second-biggest debt.

“At best, we expect no growth in 2014, and an expansion of just 1 percent in 2015, partly driven by the recent tax cuts” and European Central Bank credit easing, Daniele Antonucci, senior European economist at Morgan Stanley, said in a note to clients. Both measures are likely to have little effect, he said.

Renzi has acknowledged that annual GDP growth will probably fall well below the Treasury’s 0.8% forecast, while the government’s debt reduction plans also seem to be yielding disappointing results, Wolfango Piccoli, managing director at Teneo Intelligence in London, wrote in a research note this week.

“Under present conditions, and assuming a more realistic growth rate of 0.3%, the cabinet will need to find at least 15 billion euros to 16 billion euros to keep its 2014 deficit reduction plans on course,” he said.

The Bank of Italy last month lowered its growth forecast for this year to 0.2%, less than a third of its previous prediction. Even so, industrial production increased 0.9% in June, Istat said. That beat the median economist forecast of 0.8%.

While the third quarter should see a modest pickup in personal consumption and gross fixed investment, the Italian economy and banking industry are among the most exposed to Russia’s economic instability, Riccardo Barbieri, the London-based chief European economist at Mizuho International Plc, said in a July 31 research note.

“Even the 0.3% increase we have penciled in for the third quarter would be a good result given the current circumstances,” he said.

France

The Bank of France said it estimates the economy to grow 0.2% in the third quarter, unchanged from the second quarter growth projection.

The survey data from the central bank today showed that business confidence among manufacturers weakened marginally in July. The corresponding index fell to 96 from 97 in June.

Industrial production grew slightly in July and business leaders expect production to be broadly stable next month.

Meanwhile, confidence among service providers remained unchanged in July. The index stood at 93.

In the services sector, activity picked up in July. According to business leaders, service sector activity will grow slightly in August.

Nigeria

Going by current economic trends and prospects, the Nigeria’s economy may achieve an annual Gross Domestic Product of 7.1% by 2030, a new report by McKinsey and Co has said.

“The country is well positioned to benefit from trends such as rising demand from emerging economies, growing global demand for resources, and the spread of the digital economy. Nigeria also has a young and rapidly growing population and an advantageous geographic location in West Africa, which enables trade within the continent, as well as with Europe and North and South America,” the reported stated.

It added that should the country reach its full potential, annual GDP could exceed $1.6tn by 2030, making it one of the top 20 economies globally.

According to the report compiled by the global management consulting firm, global investors and business leaders look to Africa as the next region of transformative economic growth, but are paying increasing attention to Nigeria.

It stated, “With about 170 million inhabitants, the country has long been the most populous in Africa, but it is only now being recognized as the continent’s largest economy. In April 2014, the government began to release rebased data that showed a gross domestic product of $510bn in 2013, compared with $354bn for South Africa.

“The rebased data also revealed an economy that was far more diverse than previously understood and that, with the right reforms and investments, could become one of the world’s leading economies by 2030.”

The report that about 60% of the country’s estimated population of 273 million by 2030 may live in households earnings of more than $7,500 per annum, boosting consumer boom.

It added that despite the country’s history and ongoing struggles with terrorism and poverty it had made economic progress since 2000, averaging annual GDP growth of 8.6% under civilian rule from 1999 to 2010, compared with just 1.5% a year under military rule from 1983 to 1999.

“The new data show Nigeria is no longer just a petro-economy. While oil and gas remain critical sources of government income and of exports, the country’s entire resource sector today accounts for just 14% of GDP. Agriculture and trade are larger and faster growing,” the report stated.

According to the researchers, agriculture could be a major boost but while crop yields have improved in recent years, there is limited access to productivity-improving inputs, such as fertilizer and mechanized tools, high postharvest losses and an inefficient market system, making farmers receive a small share of the value their work creates.

“Improvements on several fronts could help raise both the volume and the value of Nigeria’s agricultural production in the next 15 years. The economic value of agriculture, already the largest sector of the economy, at 22% of GDP, could more than double, from $112bn a year in 2013 to $263bn by 2030,” it added.

Trade, infrastructure, oil and gas, and manufacturing were also tipped as the major growth areas for the country’s economy.

The report stated that given the expansion of the consumer class, consumption could triple, rising to almost $1.4tn a year in 2030, accounting for an annual increase of about eight per cent.

It added, “This would make trade the largest sector of the economy and provide a particularly good opportunity for makers of packaged foods and fast-moving consumer items such as paper goods, categories that could grow by more than 10% a year.

“On average, the value of a nation’s core infrastructure—roads, railways, ports, airports, and the electrical system—represents about 68% of GDP, but in Nigeria it is only about 39%. Between core infrastructure and real estate, total infrastructure investments in Nigeria could reach $1.5tn from 2014 to 2030. This would make building infrastructure not only a major contributor to GDP but also an enabler of growth across the economy.

“Manufacturing in Nigeria contributed just $35bn to the economy in 2013, or about 7% of GDP. If Nigeria could match the performance of nations such as Malaysia and Thailand when their manufacturing sectors were expanding rapidly, output could reach $144bn a year in 2030. While the oil-and-gas sector is expected to grow by 2.3% a year at best, its success is still vital to Nigeria’s economy. With the right reforms, we estimate that liquids production could increase from an estimated 2.35 million barrels a day, on average, in 2013 to a new high of 3.13 million by 2030.”

McIlvaine Company

Northfield, IL 60093-2743

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

E-mail: editor@mcilvainecompany.com

Web site: www.mcilvainecompany.com