Prime Minister of Japan, Shinzo Abe, approved the draft budget for the fiscal year starting April 2014, which reported a spending budget of ¥95.9trln. The inflows from higher tax revenue would be used to provide a moderate cut in the new borrowing and increase spending to further boost the economy. Of the projected spending for the coming year, nearly one-third would be used for ensuring social security and approximately one-fourth for debt servicing costs.

IMF Managing Director, Christine Lagarde, stated that the US economy could grow at a faster pace next year than the earlier predicted 2.6%. She attributed the likely increase in the GDP to the recent budget deal and monetary stimulus cut, and a series of other encouraging economic reports.

As per a survey by GfK, consumer confidence dropped to -13 in December, recording the third consecutive decline on a monthly basis. However, markets were expecting a marginal improvement in the reading to -11 from -12 in November. The economic outlook lowered to -4 from -1, while major purchases fell to -17 from -13.

Finance ministers of the European Union (EU) finalised the agreement over the treatment of failing banks in the region. The ministers have decided to set up an industry-financed resolution fund of €55bn over the next 10 years. This fund would be backed by an agency that would take decisions regarding how to handle failing banks.

Eurozone Finance Ministers agreed over a rescue payment of €1bn (US$1.4bn) to Greece, as part of the third review of the country’s economic adjustment programme. The latest bailout was due by the end of 2013. The country has already received US$322bn as of date. Meanwhile, in its interim report on the monetary policy, Greece’s central bank expressed confidence that the economy was likely to come out of the prolonged recession of six years, with recovery expected to start from 2014.

Mario Draghi, President of the European Central Bank (ECB), expressed dissatisfaction over the treatment of failing banks in the region by the concerned governments. He stated decision making could become very complex and financing arrangements may be inadequate. Draghi also suggested a faster procedure to decide on failing banks.

The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to 50.5 from November’s final reading of 50.8. Nevertheless, new export orders increased at a faster rate. Markit/HSBC will release the final reading on 2nd January.

As per the final data from the Ministry of Economy, Trade and Industry, the country’s industrial production advanced 1% m-o-m in October, surpassing the flash estimate of a 0.5% increase. Shipments rose 2.3% compared to the initial forecast of 1.8%, while inventories declined 0.3% vis-a-vis the estimate of 0.5%. Capacity utilization improved 1.2% m-o-m in October.

The British Chambers of Commerce (BCC) revised the 2013 growth outlook for the UK to 1.4% from an earlier estimate of 1.3%. For 2014, growth projection was upgraded to 2.7% from 2.2%, and for 2015, the growth figure was marginally downgraded to 2.4% from 2.5%. A strong household consumption could accelerate the economic growth for 2013 and 2014. The Bank of England’s policy threshold of 7% unemployment rate is expected to be achieved in Q3 2015, BCC reported.

Senate Democrats and Republicans finalised the budget framework to lower US federal spending cuts, and fund the government after mid January. The deal seeks to reduce automatic spending cuts by about US$63bn over two years and narrow the deficit by US$23bn. The compromise deal has avoided a government shutdown following the expiry of the funding authority on 15th January. The agreement is yet to be passed by the Congress.

As per data from the Royal Institution of Chartered Surveyors (RICS), the house price index for November advanced to 58, an 11-year high, from 57 in October as demand outweighed supply. However, the reading was below the market forecast of 59. In a separate report, Bank of England’s Governor, Mark Carney, stated the UK still required significant stimulus that, in turn, could lead to risks for the housing market.

Japan’s gross domestic product (GDP) expanded 0.3% q-o-q in Q3 2013, revised down from flash estimates of 0.5%, the Cabinet Office revealed today. The GDP reading for Q2 2013 demonstrated 0.9% expansion. GDP improved 1.1% on an annualised basis in Q3 2013, down from the preliminary reading of 1.9%, against an expected 1.6% rise.

The leading index of business conditions in Japan advanced to 109.9 in October from 109.2 in September, as per flash estimates from the Cabinet Office. The actual reading exceeded economists’ forecast of 109.7 for the month. The coincident economic index increased to 109.6 in October from 108.4 in the preceding month vis-a-vis the market estimate of 109.8. The lagging index edged down to 113.1 from 114 in September.

In its Beige Book, the Fed stated the US economy expanded at a ‘modest to moderate’ pace from early October through mid-November, with all the twelve regions of the Fed registering growth. This increase was mainly ascribed to the contribution from manufacturing, technology and housing sectors. As per the report, the manufacturing sector’s performance was buoyed by gains in the motor vehicle and high-technology industries.

Seasonally adjusted annual sales for total vehicle sold in the US reached 16.4 million in November, its best monthly figure since February 2007, industry research firm Autodata reported yesterday. This number outperformed expectation of 15.8 million units and came higher than last month’s reading of 15.3 million units.

Data from the British Retail Consortium revealed retail sales rose 2.3% y-o-y in November, after a 2.6% increase in October. Same-store sales expanded 0.6% vis-à-vis a 0.8% gain in the preceding month.

On Friday, Moody’s upgraded Greece’s government bond rating to Caa3 from C with a stable outlook, on account of improving economic outlook and the progress made under the fiscal consolidation programme.