Transcript Folie 1

The current economic environment
Prof. Dr. Andreas Dombret
Member of the Board
Deutsche Bundesbank
– June 11, 2010 –
The world economy in June 2010 –
where do we stand?
❙ Economic recovery stronger than expected.
❙ Upward revisions of GDP forecasts.
❙ Pace of recovery uneven both globally and within Eurozone.
❙ Strong in EMEs, the US and Japan; more subdued in the euro area.
❙ Recovery in Germany intact, with strong impulses from exports.
❙ Rising sovereign debt as major downside risk.
❙ Uncertainty on financial markets due to Greek debt crisis.
❙ Consolidation: major task of economic policy.
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Good news: Upward trend in global leading indicators
❙ Upward trend of important global
leading indicators continues.
❙ Signals proceeding robust recovery of
world economy:
❙ Global PMI consistent with strong
expansion in manufacturing as well as
in other sectors.
❙ German ifo world economic climate
index on the rise; index component of
expectations at comparably high level in
recent months.
❙ OECD composite leading indicator
signaling expansion for world economy
since November 2009.
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Good news: Upward revisions for global growth and
trade projections
Forecasts from OECD Economic Outlook May 2010
Growth in:
2009
2010
Diff.
from
Nov.
2011
Diff.
from
Nov.
Real GDP
OECD
-3.3
+2.7
+0,8PP
+2.8
+0,3PP
World
-0,9
+4,6
+1,2PP
+4,5
+0,8PP
World trade
-11,0
+10,6
+4,6PP
+8,4
+0,7PP
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❙ OECD: global output
+4.6% in 2010.
❙ Forecasts revised
upward;
in particular for
OECD members
(from 1.9% to 2.7%).
❙ World trade
strengthened;
trade growth robust.
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Good news: Robust Recovery
Forecasts from OECD Economic Outlook May 2010
GDP growth
(calendar adjusted)
2009
2010
2011
USA
-2.4
+3.2
+3.2
Japan
-5.2
+3.0
+2.0
UK
-4.9
+1.3
+2.5
Euro area
-4.1
+1.2
+1.8
Germany
-4.9
+1.9
+2.1
China
+8.7
+11.1
+9.7
OECD
-3.3
+2.7
+2.8
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❙ Global economy now back
on growth track.
❙ Performed better than
anticipated.
❙ Recovery expected to
continue…
❙ … after most severe
recession since WW II in
2009.
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Bad news: Recovery uneven across and within regions
Forecasts from OECD Economic Outlook May 2010
GDP growth
(calendar adjusted)
2009
2010
2011
USA
-2.4
+3.2
+3.2
Japan
-5.2
+3.0
+2.0
UK
-4.9
+1.3
+2.5
Euro area
-4.1
+1.2
+1.8
Germany
-4.9
+1.9
+2.1
China
+8.7
+11.1
+9.7
OECD
-3.3
+2.7
+2.8
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❙ Output expanding at
varying speeds:
❙ Growth strong and close to
pre-crisis levels in some
EMEs in South and East
Asia and Latin America; …
❙ … recovery in some OECD
member much weaker.
❙ US on the verge of selfsustaining recovery; growth
in Europe more subdued.
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USA: On the verge of self-sustaining recovery
❙ Since mid-2009 strong pick-up in real
GDP.
❙ Temporary impulses from fiscal
stimulus and slower pace of inventory
decumulation.
❙ Strengthening in private final demand
(consumption as well as spending on
equipment and software) points to
self-sustaining recovery.
❙ Continued decline in private nonresidential construction; recovery in
housing fragile.
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USA: Housing market tentatively stabilizing
❙ Noticeable stabilization of house
prices in 2009. However, also due to …
US house price indices
Year-on-year change
❙ … Fed interventions on the mortgage
market …
20
15
10
❙ … as well as fiscal incentives to buy
homes.
%
5
0
-5
-10
S&P Case-Shiller Index
(national)
-15
FHFA Purchase-Only Index
❙ FHFA Purchase-Only Index declined in
2010Q1 by 3.2% yoy. S&P Case-Shiller
Index up by 2.0% yoy.
-20
-25
2001Q1
2003Q1
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2007Q1
2009Q1
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Japan: Recovery on its way
❙ GDP expanded strongly in winter
2010, for fourth consecutive quarter.
❙ Recovery mainly driven by
substantial growth in exports; high
demand particularly from Asian
emerging countries.
❙ Domestic demand rebounded
recently as well; ongoing fiscal
stimulus measures and recovery in
trade feeding into profits and wages.
❙ However, public finances
increasingly strained, with gross debt
forecasted to exceed 200% of GDP.
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Euro area: Recovery moderate as well as uneven
❙ In Q1 only slight increase in GDP.
❙ Growth mainly driven by inventories.
❙ Noticeable rise of GDP in Italy (+0.5%);
much smaller increases in Germany
(+0.2%), France and Spain (both +0.1%).
❙ New forecast of the Eurosystem (published
yesterday):
❙ GDP growth (average of published
bandwidth): +1.0% in 2010, +1,2% in 2011.
❙ Quarterly profile volatile.
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Euro area: Slow recovery of industrial production
❙ Capacity utilization still well below
long-term average.
❙ But: Remarkable inflow of orders in
particular from outside euro area; …
❙ … industrial confidence recovered
noticeably in early spring; now just
below long-term average …
❙ … hinting at further recovery of
production.
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Euro area: Still no turnaround on labor market
❙ Employment:
Q4/2009 -0.3% qoq;
Q3/2009 -0.5% qoq.
❙ In April slight increase in
standardized unemployment rate
to 10.1% (highest level since
August 1998).
❙ Compared to previous year,
significant increases in all large
EMU member countries (ES, F,
IT) except Germany.
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Germany: Intact recovery
❙ Pace of recovery slowed in winter halfyear.
❙ GDP +0.2% in both Q4/2009 and
Q1/2010.
❙ In Q1 marked positive contribution from
inventories, negative contributions from
domestic demand and foreign trade
(imports increased even more than
exports).
❙ Much stronger momentum expected for Q2.
❙ Forecasts of GDP growth: mostly above
euro area average in 2010 and 2011,
making Germany temporarily the engine
of growth.
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Germany: Strong industrial production more than
compensates negative impact of cold weather in Q1
❙ Further rise in industrial
production in April.
❙ Orders: Ongoing strong impulses;
pick-up in demand regionally
broad-based.
❙ Stock of orders (according to ifoInstitute) still as low as during the
last recession 2002/2003.
❙ Outlook for 2010: Industrial output
catching up with orders.
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Germany: Labor market surprisingly robust
❙ Employment continued to
increase in April; only slightly
lower than a year ago.
❙ In May registered
unemployment declined
significantly, unemployment
rate now at 7.7%.
❙ Past fears of looming backlash
refuted by ongoing robustness.
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Euro area: Moderate rise in prices expected in 2010
Harmonised Consumer Price Index
(Overall index / EMU-countries (incl. Germany)) 1)
❙ Recently, inflation accelerated
somewhat in euro area.
❙ HICP-inflation:
s.a. +0.1% in May mom; +0.2% in
April mom.
❙ In April, again marked rise in prices for
energy and unprocessed food.
❙ But core rate stabilised at low level.
❙ Inflation expectations continue to be
anchored in line with price stability.
❙ Eurosystem forecasts for 2010 and
2011 (average of published bandwidth):
+1.5% and +1.6%.
1) Changing Composition
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Germany: Consumer prices continue to rise
moderately
Consumer price index
❙ After significant increases
in the two preceding
months, …
❙ … consumer prices stopped
rising further in May.
❙ Price level: +1.2%
compared to May 2009.
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What are the risks?
❙ So far: Global economy returned to strong growth and recovery probable to
continue.
❙ Stronger than expected recovery in world trade as upside risk.
❙ In some EMEs in South and East Asia and Latin America already some signs of
overheating.
❙ Failure to reign in rising sovereign debt in industrialised countries as major
downside risk.
❙ Up to now, no observable impact of Greek crisis on real economy outside of Greece.
❙ Rising concerns about insufficient consolidation; possibly undermining process of
normalization in financial system.
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Financial markets assessment
❙ Overall, financial markets stabilizing in recent months with economic recovery
gathering steam.
❙ Premature to conclude financial conditions have normalized.
❙ Banking system’s health generally improving; some banks remain vulnerable.
❙ Bank lending activity remains weak.
❙ Some supply-side effects within the euro area …
❙ … but decline in Germany mostly due to lower demand – credit crunch only a risk
scenario.
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Euro-area: Government bond markets strained
❙ Continuous stress on government bond
markets due to Greek debt crisis.
❙ Initial decrease of EMU yield spreads over
German Bunds after rescue package was
agreed in early May largely evaporated.
❙ Spread widening partly due to falling
Bund yields (“safe haven flows”).
❙ Financing conditions of corporations
deteriorated somewhat in May, but
spreads still below 5-year average.
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Interest rate spreads between EMU government bonds
strongly dispersing
❙ Individual spreads of EMU
government bonds over German
Bunds still on a high level.
❙ Significant downward effects from
stability measures; spreads rising
again since mid-May.
❙ Further increase of uncertainty,
possibly due to doubts about
success of fiscal consolidation
efforts.
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Exchange rates: Euro strained
❙ In May, Euro depreciated
markedly against US-Dollar,
Pound sterling and Yen.
❙ Effective exchange rate (against
21 trading partners): since end of
2009 depreciation of about 10%.
❙ However, compared to LT
average: level of exchange rate
actually less noteworthy than
pace of change.
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Stock markets: Uncertainty about future stock price
developments above five-year average
❙ Strong fall in stock prices in
May. In recent days stock
markets recovered somewhat.
❙ Global rise in uncertainty in
EMU, US, Germany and JP;
in Germany below trend.
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Summing up
❙ All in all: global economic recovery progressed better than expected.
❙ Recovery in Germany intact; should pick up again after weak winter half-year.
❙ GDP growth expected to exceed that of the euro area at least in 2010.
❙ At the same time, the outlook for activity unusually uncertain.
❙ Deteriorating public budgets in advanced economies major downside risk.
❙ Furthermore, the multi-speed nature of the global recovery likely to continue, and
current account imbalances likely to widen again over the medium term.
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