World Economy: Upturn, but only gradual
World GDP growth is expected to increase by +2.5% in 2013 (after +2.4% in 2012) before accelerating to +3.2% in 2014, led by an improvement in the eurozone, according to EH’s latest forecasts. The eurozone will experience another year of contraction (-0.1%) in 2013 but from H2 this year should gain momentum into 2014 (+1.4%). The US will record a slight slowdown (+1.9%) in 2013 before advancing (+2.5%) in 2014. Much of global growth will continue to be attributable to emerging economies, which will contribute nearly 1.9pps in 2013 (75% of the total) and 2.1pps in 2014 (60% of the total). The EH Global insolvency index is projected to rise by +4% in 2013 (after +1% in 2012) with another strong increase in southern Europe (+19%) led by Spain and Greece.
Germany: Full-year GDP data suggest Q4 contraction
First official estimates indicate that GDP increased by +0.7% in 2012, following +3% in 2011. Significantly, the full-year rate of growth in 2012 suggests that the economy contracted in Q4, the first quarterly fall since the 2009 crisis, as the rate of expansion
in Q1-Q3 had been more positive. Exports (+4.1%) were the main growth driver in 2012, despite the difficult international environment, and imports increased by only +2.3%, so net exports contributed 1.1pps to overall growth. Consumption was up +0.8% in 2012 but capital investment contracted, with machinery and equipment down by -4.4% and construction by -1.1%. The initial estimates of 2012 GDP are in price-adjusted terms. In calendar-adjusted terms, GDP growth in 2012 was slightly higher at +0.9%, as there were three working days less in 2012, compared to 2011.
China: Latest data releases
December trade data showed export growth of +14.1% y/y (+2.9% y/y November), higher than expected. Importantly, export growth to developed markets strengthened, particularly to the EU. Import growth also accelerated, to +6% y/y (0% November), mainly reflecting imports for domestic use. December consumer price inflation accelerated to 2.5% y/y (2% November) but this was driven by food prices, particularly vegetable prices following cold weather. Non-food prices increased only 1.7% y/y (1.6% y/y in November). December credit growth showed weaker loan demand, but the broader “total social financing” measure increasingly the focus of policymakers—increased, although its growth is levelling off. Overall, data continue to point to a modest pick-up in activity and EH expects growth in 2013 of +8% (Q4 GDP data will be released later this week).
US: End-year data
Recent data offer little definitive guidance to the state of the economy. Despite the holiday period, which fell short ofexpectations, retail sales grew +0.5% mo/mo in December 2012 (+0.4% mo/mo in November), finishing the year up +5% y/y, compared with a long-term average of +6.4%. By contrast, the trade deficit was up sharply in November, to USD48.7 billion from USD42.1 billion the previous month, suggesting a weak contribution by net exports to Q4 GDP. Consumer credit increased markedly in November 2012, partly reflecting student debt. Meanwhile, it is likely that many Americans were surprised to see how much their first paychecks of the year had been reduced by the 2% increase in Social Security taxes resulting from the partial fiscal cliff deal. Political positions are hardening over the impending debt ceiling and spending cut debate. Expect this to come to a head towards the middle of February.
COUNTRIES IN FOCUS
Mediterranean, Africa & Middle East – Mali
Americas – Peru & Mexico
Asia-Pacific – India
Europe – France