Seasonally-adjusted gross domestic product (GDP) in the OECD area rose by 0.8% in the fourth quarter of 2009, up from 0.6% in the previous quarter, according to the OECD.
Real GDP grew strongly in the United States and Japan by 1.4% and 1.1%, respectively. By contrast, GDP growth in the euro area slowed to 0.1% in the fourth quarter compared to 0.4% in the third quarter. GDP growth in France was relatively strong, at 0.6% but German GDP remained unchanged on the previous quarter and in Italy, GDP declined by 0.2%. The United Kingdom recorded positive GDP growth of 0.1% in the fourth quarter after six consecutive quarters of contraction.
Details available here.
Technorati Tags: economic-data, GDP, OECD
OECD composite leading indicators (CLIs) for December 2009 provide stronger signals of an expansionary economic outlook than last month.
CLIs for the G7 economies as well as China, India, Russia and Brazil, are now all close to, or above, their long-term trends. In all these countries, industrial production – the underlying reference series for the CLIs – has now reached its trough.
The CLI for the OECD area increased by 0.9 point in December 2009 and was 10.1 points higher than in December 2008. The CLI for the United States increased by 0.9 point in December, 9.0 points higher than a year ago. The Euro area’s CLI increased by 0.9 point in December, 12.2 points higher than a year ago. The CLI for Japan increased by 1.2 point in December, 8.1 points higher than a year ago. Full report here.
Technorati Tags: CLI, economic-data, leading indicators, OECD
Research Recap has highlighted the relative strength of South Korea’s economy and its manufacturers during the economic downtown, so we thought it would be helpful to take a deeper look at the country. The Economist Intelligence Unit is now estimating the country’s real GDP growth in 2009 at 0.6%, compared with an expected contraction of 1% previously estimated. By special arrangement with the EIU we are pleased to offer complimentary access to the EIU’s latest Country Report South Korea.
Highlights:
- The green shoots of South Korea!s economic recovery, which began to emerge in the second quarter of 2009, have continued to remain in evidence, with real
GDP maintaining its growth rate in the third quarter of the year, domestic factories running at higher capacity and the country!s merchandise export
sector continuing to stabilise.
- There is a growing consensus among economists that South Korea is coming out of the global economic downturn faster than
many of its industrial peers.
- Nonetheless, the Ministry of Strategy and Finance (MOSF) is sticking to its cautious stance on an exit strategy regarding the emergency policy measures that were initiated as the domestic economy began to deteriorate in the second half of 2008.
The green shoots of South Korea!s economic recovery, which began to emerge in the second quarter of 2009, have continued to remain in evidence, including domestic factories running at higher capacity.
- The financial-sector regulator, the Financial Supervisory Service, is using pre-emptive measures to try to prevent companies from going bankrupt and
asset price bubbles from emerging.
- In year-on-year terms, real GDP edged up by 0.6% in the third quarter of 2009 after three consecutive quarters of contraction.
- The weakness of the won in international foreign-exchange markets has been a boon for the local economy, which is dependent on merchandise exports.
The EIU’s 25-page Country Report South Korea has been made available free of charge to ResearchRecap users for 30 days by special arrangement with the Economist Intelligence Unit, an Alacra content partner. After 30 days, the report will revert to its regular AlacraStore price of $270.
Technorati Tags: Asia-Pacific-region, economic-data, Economist Intelligence Unit, free research, GDP, South-Korea
A few interesting tidbits from the World Bank’s latest biannual East Asia and the Pacific Update:
- The ratio of exports to GDP has risen only in Korea
- Korea’s companies gained global market share as others in Asia stumbled
- Korea’s Hyundai has increased its share in the U.S. by almost 50% during the crisis (see also Korean Automakers Benefitting from Clunker Schemes)
- Vehicle sales in China have surpassed those in the U.S.
- China has overtaken Germany as the world’s largest exporter (in percent of world exports)
- Due to the crisis, 14 million more people will be in poverty by 2010
East Asia’s rebound from the economic downturn has been surprisingly swift and very welcome, the report notes. “A year ago, exports and industrial production fell sharply across the region, layoffs were on the rise, and capital flowed out weakening asset prices and currencies. A vigorous and timely fiscal and monetary stimulus in most countries in East Asia, led by China and Korea, along with decisive measures in developed economies to prevent a financial meltdown after the collapse of Lehman Brothers, have stopped the decline in activity and set in motion the regional rebound. The shift to inventory restocking since mid-2009 has also helped boost growth. These factors have led us to revise our projection for real GDP growth in developing East Asia up by 1.3 percentage points since the previous forecast in April.”
All in all, real GDP growth is set to slow to 6.7 percent in 2009 from 8 percent in 2008, or much more moderately than after the 1997-98 Asian financial crisis.
The report also documents China’s central role in pulling the region out of recession.
FTAlphaville notes that China’s current account surplus will fall from 9.8% of GDP to 5.6% this year and 4.1% in 2010, according to the report.” The forecast will potentially bolster Beijing’s resistance to appeals expected from US President Barack Obama for renminbi appreciation. A rapidly falling surplus would also signal some rebalancing of the Chinese economy. In its latest quarterly report on China, the Bank also said that growth would reach 8.4%, up from its forecast 7.2% in June, followed by 8.7% next year.”
FTAlphaville also has an interesting analysis from Radiant Asset Management’s David Ross on the US debt to GDP balance and China.
Technorati Tags: Asia-Pacific-region, automakers, china, economic-data, Hyundai, Korea
The IMF says the “green shoots” of recovery appear more firmly rooted in Asia than in other regions.
Asia’s growth is forecast to accelerate to 5¾ percent in 2010 from 2¾ percent in 2009, both higher than previously projected, according to the International Monetary Fund’s Regional Economic Outlook (REO) for Asia and the Pacific, This is much higher than the 11⁄4 percent growth forecast for the G-7 countires next year, but still below the 6 2⁄3 percent average recorded over the past decade.
“Not only are they (green shoots) more prevalent, but they have also appeared earlier (in April in many cases), and have progressed further. The progress made by China, in particular, is striking. Alone among major countries, its key growth indicators were expanding in August at rates that are above their long-term trend. In contrast, indicators in key Western economies, such as the United States and Germany, suggest that output was only stabilizing in August after months of severe contraction.”
Overall in Asia, policymakers consequently face two major challenges, the IMF says.”In the near term, they will need to manage a balancing act, providing support to economies until it is clear that the recovery is sufficiently robust and self-sustaining, while ensuring that it is not maintained for so long that it ignites inflationary pressures or concerns about fiscal sustainability. Striking the right balance will be difficult. But the key is clear: policymakers will need to assess the state of private demand and the extent to which it can substitute for a withdrawal of public sector demand. ”
The other major policy challenge will be to devise a way to return to sustained, rapid growth in a new global environment of softer G-7 demand.
In this “new world,” Asia’s longer-term growth prospects may be determined by its ability to recalibrate the drivers of growth to allow domestic sources to play a more dynamic role. This type of successful rebalancing will require action on a broad front. Better social safety nets will be needed to reduce private precautionary savings and continued efforts at financial sector and corporate governance reforms would also allow households to offset higher corporate saving by increasing consumption. At the same time, structural reforms could raise productivity and allow for a smooth reallocation of resources across the economy to compensate for the lower momentum from exports. Finally, Asia will need to be willing to live with smaller current account surpluses and more flexible exchange rate management.
Technorati Tags: economic-data, economic-forecast, emerging Asia, GDP
Rating trends for non-financial corporates in the Americas indicate firming credit quality and a possible emergence from the economic downturn.
Excerpts from Turning the Corner? Ratings Suggest an Upturn
The number of monthly downgrades of non-financial corporate ratings in the Americas has plunged by more than two-thirds since December to levels last seen prior to Lehman Brothers’ bankruptcy filing. While downgrades still outnumber upgrades, the gap has narrowed substantially.
There are one-third as many ratings under review for downgrade as there were in March, suggesting further ebbing of the downgrade wave.
The liquidity of speculative-grade companies has also improved as the reopening of the high-yield bond market and narrowing credit spreads have allowed more companies to refinance their debts. Moody’s Liquidity-Stress Index sits at a nine-month low and has declined every month since its peak in March.
These improving trends are consistent with our forecast that the U.S. speculative-grade default rate will peak at 13.2% in November, followed by a steady decline to 4.1% — near the average of the last 20 years — by next August.
Technorati Tags: corporate-debt, corporate-default, credit-ratings, economic-data, speculative-grade-bonds
Sees signs of very modest growth but does not expect improvement to be exceptionally robust.
Excerpts from Moody’s revises North American Manufacturing Industry Outlook to stable
Moody’s Investors Service today changed its Industry Sector Outlook for the North American Diversified Manufacturing sector to stable from negative. This outlook expresses Moody’s expectations for the fundamental credit conditions in the industry over the next 12 to 18 months.
This change in outlook reflects Moody’s view that the drastic reduction in manufacturing activity experienced over the better part of the past year has begun to moderate and that very modest growth trends may take hold.
This should contribute to the firming of business fundamentals for the diversified manufacturers. A stable outlook indicates that Moody’s does not expect business conditions for the manufacturers to materially improve or worsen.
However, “while Moody’s believes fundamentals to be firming for the manufacturers, the agency does not expect the improvement to be exceptionally robust. Underpinning this view is the weakness that persists in the global economy, which will be a constraint on volume levels for some time. Low capacity utilization of about 67% currently — well below the long-term average of almost 80% — will also constrain growth. Consequently, investment activity will likely remain lackluster while pricing power remains elusive even as higher commodity costs begin to filter through on the input side.”
Technorati Tags: credit-ratings, economic-data, manufacturing
The improvement in the OECD’s leading economic indicators is looking like a solid trend after three straight positive months.
OECD composite leading indicators (CLIs) for July 2009 show stronger signs of recovery in most of the OECD economies. Clear signals of recovery are now visible in all major seven economies, in particular in France and Italy, as well as in China, India and Russia. The signs from Brazil, where a trough is emerging, are also more encouraging than in last month’s assessment.
The CLI for the OECD area increased by 1.5 point in July 2009 and was 1.9 point lower than in July 2008.
The CLI for the United States increased by 1.6 point in July, 4.3 points lower than a year ago. The Euro area’s CLI increased by 1.9 point in July, 1.4 point higher than a year ago. The CLI for Japan increased by 1.4 point in July, 6.6 points lower than a year ago. Full details here.
Technorati Tags: CLI, economic-data, economic-forecast, leading indicators, OECD
Count me among those not taking much comfort from today’s slightly-less-bad-than-expected US job losses. Looks like a long, hard slog back to economic prosperity.
Felix Salmon at Reuters is right to be concerned about the decline of some 7 million employed people since December 2007, and the 630,000 increase in “marginally attached” people during the last year.
…the absolute levels alone should be more than enough to depress anybody looking for any sign that the US economy is looking remotely healthy.
The OECD provides a disturbing chart in its latest economic assessment, showing that since the start of the recession the unemployment rate in the US has increased more dramatically than in almost all OECD countries and much more sharply than in Japan and other major comparable European economies other than Spain.
Tyler Durden at Zero Hedge points out that the “real” unemployment rate is 16.8% , including “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.”
In other words, in reality the U.S. labor market is likely about as bad as Spain in terms of undoctored jobless data.
And then there’s this chart of the day comparing job losses during the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-2006 (dashed blue line).
…the current job market has suffered losses that are more than six times as much as average (20 months after the beginning of a recession). In fact, if this were an average recession/job loss cycle, the number of jobs would have begun to increase five months ago.
Source: Chart of the Day
Ed Harrison at CreditWritedowns is a bit more optimistic but also offers several negative indicators including this:
The 12-month loss in seasonally-adjusted non-farm payrolls (NFP) is still increasing and is at a business cycle high of 5.8 million.
Bringing this back to the financial markets, Standard & Poor’s finds an increase in the correlation between unemployment and credit card losses: historically, a 100% increase in the unemployment rate suggests about an 82% increase in credit card losses. During economic downturns like the one we’re currently in, however, this relationship becomes almost one-to-one (96%).
In other words, a 100% increase in the unemployment rate means a 96% increase in credit card losses.
The rolling 12-month percent changes in the unemployment and credit card loss rate levels, which have been far below 60% since 1992, are positively correlated. During the past few months, however, these 12-month percent changes have been around 70%, which suggests a steeper rise in credit card losses as a result of the rising unemployment rate.
One also has to wonder about the impact of underemployment, especially in an economy with a growing number of non traditional jobs, and also how uncertainty over the outcome (or indeed the outcome itself) of health care reform may retard rehiring. Don’t break out the champagne just yet.
(Bonus Weekend listening: for a historical perspective on employment, check out this podcast from The Back Story. If you can handle history professors channeling Click and Clack, this so for you.)
Angus Robertson
Technorati Tags: credit card debt, economic-data, employment, unemployment
Executives’ optimism about economy and company prospects continues to grow, yet full recovery is far off (McKinsey). http://bit.ly/y0YmD
HSBC and Barclays battle bad debts, but their investment banks boom $HSBA $BARC (The Economist) http://bit.ly/18A89W
RT @StructuredFin FDIC Sets Toxic-Loan Portfolio for Market Test http://bit.ly/7DW2x
Big private equity groups sitting on a $400bn debt mountain that must be repaid over next 5 years (FT Alphaville) http://bit.ly/ujT1X
RT@ techstartups Clean-tech is on the rebound from a steep plunge in investments (San Jose Mercury News) http://bit.ly/1Mwr4z
REIT Rally Facing a Challenge as High Debt, Lower Commercial-Property Values Present Obstacles (WSJ) http://bit.ly/HJ66f
Technorati Tags: Barclays, cleantech, commercial-real-estate, economic-data, HSBC, investment banks, private-equity, REIT, toxic assets, tweets
