BNP RESEARCH - Economic & Market monitor - July-August

151152

Informations

• Publié par: mtoledan
• Publié le: 16 septembre 2011
• Nombre de lectures: 26
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

/// July-August 2011 /// 2 Italy 25 Editorial Stable, and sluggish A pause in the global recovery Economic and financial Forecasts 4 Spain 28 Some hopeful signs United States 5 United Kingdom 31 Activity, public finances: alarm levels have been Rate hikes will have to wait reached Japan 9 Brazil 35 A remarkable recovery Even the brightest growth cycles have a downward phase Eurozone 13 Russia 38 Monetary policy for the eurozone? A very tough Between struggling Europe and overheating Asia job Germany 17 India 42 Business investment will pick up Monetary policy left to deal alone with signs of overheating France 21 China 45 Bumps and troughs Concerns over inflation, less on growth Chief Editor : Philippe d’Arvisenet Completed : 30 June 2011 economic-research.bnpparibas.com  Editorial July-August 2011 Editorial A pause in the global recovery Just a bout of weakness or completely anaemic? In any case, the world Inventories at the top economy has lost its dynamic momentum as it pulled out of winter 2011. The United States, inventory variation / GDP US economy began to slow down as of the first quarter, falling back to an annualized growth rate of barely 2%. Eurozone growth has held up better at an 1,0% ed rate of nearly 3.4%, thanks notably to Germany, which accounts for 0,5% half of this figure. But economic surveys suggest that growth is stalling. They depict a rather sluggish spring and early summer that will spare few countries 0,0% in the Eurozone. In June, the main US business confidence index provided by -0,5% the Institute for Supply Management (ISM) could approach the threshold of 50, which marks the beginning of a contraction in industrial activity. The sharp, 10- -1,0% point decline since the beginning of the year has largely contributed to the bond -1,5% market rally in recent months. In Europe, comparable indexes such as the 2001 2003 2005 2007 2009 2011Purchasing Manager Index (PMI) tend to average higher levels, but they are moving in the same direction. In Germany and France, they signal milder Chart 1 Sources : National activity than in the first quarter, which admittedly benefited from exceptional factors (catch-up effect after the drop-off in production due to snowstorms in Japanese turmoil December 2010; delivery of automobile orders made just before the expiration of the "cash for clunkers" bonus). Manufacturing output, vol., 2008=100 100 GERSeveral factors contributed to a more moderate economic climate. The first is 90 UScyclical due to the completion of the restocking phase. Stocks have surpassed their highs in the United States, in both current dollars and relative to GDP. As JAP80 a result, stock building is no longer contributing to growth, after serving as a growth engine for most of spring 2009 through fall 2010. 70 The world economy has also felt the impact of the earthquake and tsunami that devastated north-eastern Japan on 11 March 2011. Japan is a small client for Europe but an essential link in the global industrial system, and its production 2006 2007 2008 2009 2010 2011 losses have been contagious. In the automotive industry, the shortage of components has slowed assembly lines and resulted in shipment delays. Order Chart 2 Sources : National indexes have fallen, and lay-offs have fuelled a rebound in applications for jobless benefits in the United States. Yet the shock seems to have been absorbed more rapidly than feared. Toyota plants were operating at 90% of Rebound in inflation production levels in February. Japanese activity as a whole has rebounded, Inflation, year-on-year and according to Ministry of Labour surveys, the lost ground should be made up by 8% the end of 2011. BRIC 6% Higher prices for both oil (+70% from June 2010 to April 2011) and agricultural 4%commodities (+50% over the same period) finally ended up spreading to the rest of US the market. This was the case in China, where the energy and food components €Z 2% are too sensitive (around 50% of total consumption) to let them surge unabated. Beijing has preferred to hit the brakes, by curbing demand rather than risk losing 0% control. Incentives for automobile purchases were eliminated, interest rates on new loans were raised (up to 6.30% for 1-year loans) and mandatory reserve ratios for -2% banks were lifted to an all-time high of 21.5%. These measures have checked juin-09 juin-10 juin-11 China's growth. Chart 3 Sources : National economic-research.bnpparibas.com 2  Editorial July-August 2011 And then what? The temporary shocks will ease as the Japanese economy US, profits vs. investment cycle recuperates from the traumatic events of 11 March and the boom in the commodity markets quiets down. For the past few weeks, metal and food prices have been % of gross added value declining, a trend that can be associated with less euphoric stock market 14% expectations. Oil prices are also declining, notably after the International Energy 12%Agency authorized the marketing of 60 million barrels of oil from its strategic reserves. 10% 8% Looking beyond the current slump, corporate investment is bound to sustain the recovery in the United States. In the private sector, annual fixed capital spending is 6% still 200 billion dollars below the previous peak in 2008. That was three years ago, long enough for replacement needs to begin to be felt again, notably in IT hardware 4% and software. Whether through loans or cash-flow generation, financing conditions 1988 1992 1996 2000 2004 2008 2012 are clearly very favourable. In the early stage of a recovery, companies often use ▬ Corporate net profits aft. Taxes profits to buy back their own shares, but they generally end up reinvesting. As a ─ Corporate investment result, in the United States value added tends to rebound ahead of investment (see Chart 4 Sources : National chart 4). Jean-Luc Proutat [e-mail]