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Philippe d’Arvisenet Global Chief Economist ECONOMIC RESEARCH DEPARTMENT. THE WORLD ECONOMIC OUTLOOK Conferences BNP PARIBAS, Thursday 6th October, 2005. Chart 1. Chart 2. Chart 3. Chart 4. I - UNITED STATES. STRONG ACTIVITY … GDP growth reached 4.2 % in 2004 - PowerPoint PPT Presentation
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1
Philippe d’ArvisenetGlobal Chief Economist
ECONOMIC RESEARCH DEPARTMENT
THE WORLD ECONOMIC THE WORLD ECONOMIC OUTLOOKOUTLOOK
Conferences BNP PARIBAS,Conferences BNP PARIBAS,
Thursday 6th October, 2005Thursday 6th October, 2005
2
Chart 1
-2
0
2
4
6
8
10
12
14
80 82 84 86 88 90 92 94 96 98 00 02 04 06f
GDP
Trade of Goods & Services
World GDP and trade growth, %
(volume, annual % change)
source: IMF (World Economic Outlook, September 2005)
3
Chart 2
0
10
20
30
40
50
60
70
72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
0
1
2
3
4
5
6
7
sources: FMI, OCDE, BNP Paribas
Brent oil price,USD/barrel
Real world growth, %
Brent oil price and world growth
4
Chart 3
0
10
20
30
40
50
60
70
80
90
100
72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04sources: IMF, BLS, BNP Paribas
nominal
real, deflated with US CPI, base 2004=100
real, deflated with US price export, base 2004=100
Brent oil price, $/barrel (monthly average)
5
Chart 4
-8
-6
-4
-2
0
2
4
80 82 84 86 88 90 92 94 96 98 00 02 04
Output gap, %
source: OECD
United-States
Japan
Euro zone
6
I - UNITED STATES
7
STRONG ACTIVITY … GDP growth reached 4.2 % in 2004 We expect about 3.5 % in 2005 and 2006 Katrina : lower activity end 2005, acceleration at the beginning of 2006 Growth components :
consumption moderating somewhat as a result of high oil prices (not much risk related to the level in indebtedness, job creations and compensations favourably oriented, long rates remain at a record low)
investment to remain strong (sound financial situation of the corporate sector, higher rates of capacity utilisation, favourable financing conditions, manufacturing mini cycle bottomed out)
exports supported by the lower dollar but impacted by weakness in European investment.
8
… INFLATION PRESSURES SHOULD REMAIN CONTAINED
wages: towards an impact of the unemployment getting closer to NAIRU
productivity gains: in line with their long term trend
… NORMALISATION IN MONETARY POLICY WILL BE ACHIEVED SOON.
9
… IMBALANCES
fiscal policy, the cycle delivers: fiscal deficit will be significantly below expectation
long term problems persist ... current account widening the dollar is likely to remain under pressure
10
Chart 5
-4
-2
0
2
4
6
8
10
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
20
30
40
50
60
70
80
90USA : economic growth and ISM index
Real GDP, y/y % change
ISM Total index
ISM New-orders index
42.7
sources: ISM, BEA
11
Chart 5bis
0
20
40
60
80
100
120
140
160
180
200
80 82 84 86 88 90 92 94 96 98 00 02 04
United States: Conference Board indices on household confidence
presentsituationGlobal
index
expectations
source: Conference Board
12
Chart 6
-2
0
2
4
6
8
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
source: BEA
USA: household income
(volume, y/y % change)
Disposable income
Personal income
13
Chart 7
-4
-2
0
2
4
82 84 86 88 90 92 94 96 98 00 02 04
-600
-300
0
300
600
United States : compensation and employment
source: BLS
Real civilian compensation
(ECI) (y/y % change)Monthly change in employment,
3-month moving average,thousand
14
Chart 8
65,5
66,0
66,5
67,0
67,5
68,0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
3
4
5
6
7
8USA: labor force participation and unemployment rates, %
Labor forceparticipation rate
Unemployment rate
source: BLS
15
Chart 9
-2
0
2
4
6
8
80 82 84 86 88 90 92 94 96 98 00 02 04
-4
0
4
8
12
16
sources: BEA, Federal Reserve
USA: household consumption and saving
Household consumption, volume, y/y %
Household saving rate, %
16
Chart 9bis
0
1
2
3
4
5
6
80 82 84 86 88 90 92 94 96 98 00 02 04sources: Federal Reserve, BEA
United States: residential investment as % of GDP
17
Chart 10
0
50
100
150
200
250
300
350
400
450
500
550
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000United States : mortgage applications
source: Mortgage Bankers of America
Purchase indexRefinancing
index
(4-week average)
18
Chart 11
0
100
200
300
400
500
600
700
800
900
1000
1100
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
USA: household debt and investment
Mortgage debt
Residentialinvestment
(flow in billion USD)
source: Flow of Funds (Federal Reserve)
19
Chart 12
7
8
9
10
11
12
13
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05source: Federal Reserve (Flow of Funds)
Home equity loans as % of household mortgage debt
20
Chart 12bis
10,5
11
11,5
12
12,5
13
13,5
14
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
1
1,5
2
2,5
3
3,5
4
4,5
5
5,5United States : household debt and delinquency rate
Debt paymentas % of disposable income
Delinquency rate: consumer credits
Delinquency rate: mortgage credits
source: Federal Reserve
21
Chart 12ter
60
70
80
90
100
110
120
130
140
150
80 82 84 86 88 90 92 94 96 98 00 02 04
10
11
12
13
14
sources: National Association of Realtors, BEA, Federal Reserve
United States: affordability index and household debt payment
Housingaffordability
index*
Household debt payment, as % of disposable income
* a 100 index means that a family with the median income can qualify for a mortgage on a median-priced home.
22
Chart 13
-4
-2
0
2
4
6
8
10
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
100
104
108
112
116
120
124
128
Real GDP,y/y % change
GDP deflator /Unit labour cost
(indice Q1/70=100)
USA : GDP growth and GDP deflator/unit labour cost ratio
sources: BEA, BLS
23
Chart 13bis
-20
-10
0
10
20
30
40
50
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
USA: corporate profits and nonresidential investment
Nonresidential private investment
source:BEA
Corporate profits with IVA & CCADJ
(nominal, y/y % change)
24
Chart 14
70
72
74
76
78
80
82
84
86
80 82 84 86 88 90 92 94 96 98 00 02 04
-15
-10
-5
0
5
10
15
20
25USA: capacity utilisation rate and private investment
Capacity utilisation rate, %
(3-mma)
Nonresidential private investment,
volume, y/y %
(80.3 : period average)
sources: Federal Reserve, BEA
25
Chart 14bis
-1
0
1
2
3
4
80 82 84 86 88 90 92 94 96 98 2000 02 04
4
6
8
10
12USA: corporate financing gap and investment as % of GDP*
(* non financial corporate)
sources: BEA, Federal Reserve
Financing gap
Investment
26
Chart 15
0
1
2
3
4
5
6
7
8
10-95 10-96 10-97 10-98 10-99 10-00 10-01 10-02 10-03 10-04 10-05
3
3,5
4
4,5
5
5,5
6
6,5
7
AAA*
BBB*
BB*
T.Bondnominal
United States: 10-year interest spread, %
* spread corporate bonds - T.Note (LH scale)
T.Note rate
-30
-20
-10
0
10
20
30
40
50
60
70
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
-6
-4
-2
0
2
4
6
8
10
12
14
* to large & medium companies* to small businesses
%
source: Federal Reserve (Senior Loan Officer Opinion Survey)
Net % of bank respondents tightening standards for commercial & industrial loans*
(Fed- Senior Loan Officer Opinion survey on bank lending practices)
Credit market debt of nonfinancial corporate business, y/y % change
27
Chart 16
-2
0
2
4
6
8
10
12
14
80 82 84 86 88 90 92 94 96 98 00 02 04source:BLS
USA: unit labour cost and core inflation
( y/y % change)
Core inflation
Unit labour cost (nonfinancial corporations)
28
Chart 17
-6
-4
-2
0
2
4
6
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
United States: core inflation
source: BLS
(y/y % change)
Consumer price
Import price
Producer price
29
Chart 18
0
1
2
3
4
5
97 98 99 00 01 02 03 04 05sources: * University of Michigan, Federal Reserve
Expected inflation, % :T.Note 10year - Inflation indexed T.Note
Consumer sentiment*:expected change in prices, %
for next year
USA: price expectations
30
Chart 19
0
1
2
3
4
5
6
7
8
9
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
United States : interest rates and inflation%
(* monthly average)
source: Federal Reserve
10-year interest rate*
Fed Funds interest rate*
Inflation, y/y %
31
Chart 20
USA : interest rates from the end of recession, monthly average
source: Federal Reserve
0
2
4
6
8
10
12
14
m1 m13 m25 m37 m49
10 year
Fed Funds
January 1983
0
2
4
6
8
10
12
14
m1 m13 m25 m37 m49
10 year
Fed Funds
October 1991
0
2
4
6
8
10
12
14
m1 m13 m25 m37 m49
10 year
Fed Funds
October 2001
0
2
4
6
8
10
12
14
m1 m13 m25 m37 m49
10 year
Fed Funds
October 2001
0
2
4
6
8
10
12
14
m1 m13 m25 m37 m49
10 year
Fed Funds
October 2001
32
Chart 21
USA : real interest rates from the end of recession, monthly average
source: Federal Reserve
-4
-2
0
2
4
6
8
10
m1 m13 m25 m37 m49
10 year
Fed Funds
January 1983
-4
-2
0
2
4
6
8
10
m1 m13 m25 m37 m49
10 year
Fed Funds
October 1991
-4
-2
0
2
4
6
8
10
m1 m13 m25 m37 m49
Fed Funds
October 2001
10 year
33
Chart 22
-8
-6
-4
-2
0
2
4
80 82 84 86 88 90 92 94 96 98 2000 02 04
-2
0
2
4
6
8
10
12
14
Fiscal balance*(federal, states & local)
Current-account balance*
sources: BEA,Federal Reserve
(* as % of GDP)
Household savings rate
USA : current-account and budget balances, and savings
34
Chart 22bis
28
30
32
34
36
38
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Expenditures
Receipts
USA : public receipts and expenditures as % of GDP
source: BEA
35
Chart 23
-400
-200
0
200
400
600
800
80 82 84 86 88 90 92 94 96 98 00 02 04
Federal government new debt
USA: purchases of US treasuries by non residents
source: Flow of Funds (Federal Reserve)
Treasuries acquisitionby the Rest of the World
Treasuries acquisitionby foreign central banks
(billion USD)
36
Chart 24
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
0,8
0,9
1
1,1
1,2
1,3
1,4
1,5
sources: Bundesbank, Réserve fédérale, Reuters
USA/Euro zone: interest rate & exchange rate
(monthly averages)
EUR/USD exchange rateUSA-Germany :
3-month interest spread, %
37
Chart 25
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
11000
80 82 84 86 88 90 92 94 96 98 2000 02 04
-5500
-4500
-3500
-2500
-1500
-500
500United States : external position
(amounts outstanding end of period, billion USD)
Financial external position
Financial liabilities
Financial assets
source: Federal Reserve (FoF)
38
II - EUROLAND
39
what leading indicators tell us : growth below potential once again in 2005 and 2006
domestic demand is lagging; high unemployment, low increase in real wages impact households confidence and consumption
the financial situation of the corporate sector has strongly improved, and external demand is likely to be sustained, but the weak domestic demand will prevent a strong recovery in investment
the renewed strength of the euro will dampen the contribution of external demand to GDP growth
significant and structural national differences across member countries
40
fiscal policies under stress; the stability pact has been watered down, several countries (Italy, Portugal, Greece …) have entered the EDP (Excessive Deficit Procedure), France and Germany likely to overshoot the ceiling of 3% of GDP in 2005
monetary policy to remain accommodative core inflation outlook is still favorable and growth disappointing no price-wage spiral despite oil shock liquidity is abundant with consequences on asset prices, but with no
general push to domestic demand and consumption prices as yet the appetite to implement structural reforms remains mixed towards a lasting wait & see stance
41
Chart 26
-4
-2
0
2
4
6
1999 2000 2001 2002 2003 2004 2005
Real GDP, y/y % change
United States
Euro zone
Japan
sources: BEA, Cabinet Office of Japan, Eurostat
42
Chart 27
40
45
50
55
60
65
97 98 99 00 01 02 03 04 05
Euro zone : PMI
PMI services
PMI manufacturing
source: Reuters
43
Chart 28
45
47,5
50
52,5
55
57,5
60
62,5
65
98 99 00 01 02 03 04 05
-0,5
-0,25
0
0,25
0,5
0,75
1
1,25
1,5
Composite PMI
Real GDP, q/q , %
sources: Reuters, Eurostat
Euro zone : PMI and real GDP growth
44
Chart 29
-1
0
1
2
3
4
5
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
-30
-25
-20
-15
-10
-5
0
5Euro zone : consumer confidence and private consumption
Consumer confidence (balance of opinions, %)
Real privateconsumption,y/y % change
sources: Eurostat, European Commission
45
Chart 30
-2
0
2
4
6
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Euro zone : GDP and employment growth, y/y %
Real GDP
Total employment
source: Eurostat
46
Chart 31
3
4
5
6
7
8
9
10
11
12
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Unemployment rate, %
Euro zone
United States
sources: Eurostat, BLS
47
Chart 32
-20
-15
-10
-5
0
5
10
15
20
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
-25
-20
-15
-10
-5
0
5
10
15
20
25
Euro zone: trade weighted EUR and exports
Nominal effective EUR,y/y % (inverted scale)
source: ECB, Eurostat
Exports of goods, volume,3-month moving avg, y/y %
48
Chart 33
Real GDP growth, y/y % change
sources: Insee, Buba, Istat
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005
GDP
Exports of G&S
Private consumption
France
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005
GDP
Exports of G&S
Private consumption
Germany
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005
GDP
Exports of G&S
Private consumption
Italy
49
Chart 34
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
1999 2000 2001 2002 2003 2004 2005
Total inflation
Core inflation
Euro zone: ECB repo rate and inflation
ECB short-term repo rate
sources: Eurostat, ECB
50
Chart 35
-2
-1
0
1
2
3
4
5
6
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Unit labour cost
Labour productivity
GDP deflator
sources: ECB, Eurostat
Euro zone: unit labour cost and GDP deflator
(y/y % change)
51
Chart 36
Euro zone: M3 and credit growth
0
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005
M3Household credit
Non financial corporate credit
source : ECB
M3 target: 4,5 %
(amount outstanding, y/y %)
52
Chart 37
100
110
120
130
140
150
160
12-98 12-99 12-00 12-01 12-02 12-03 12-04 12-05
Euro zone : M3 & target, indices December 1998 = 100
source: Eurostat
M3
Target (+4.5 % per year)
53
Chart 38
-30
-20
-10
0
10
20
30
40
50
1999 2000 2001 2002 2003 2004 2005
Euro zone : monetary aggregates, y/y % change
sources: Eurostat, ECB
M1
Currency in circulation
M3
54
Chart 39
70
75
80
85
90
95
100
105
80 82 84 86 88 90 92 94 96 98 00 02 04
Euro zone : nominal GDP / M3, indice Q1/80 = 100
source: Eurostat
55
Chart 40
0
1
2
3
4
5
6
01/02 07/02 01/03 07/03 01/04 07/04 01/05 07/05
sources: ECB, Ecowin
Euro zone: OATei
Benchmark 10years
OATei 10years, breakeven inflation(long-term inflation expectations)
%
56
Chart 41
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
2003
2004
2005e
2006p
Euro zone: fiscal balance as % of GDP
sources: OECD, BNPParibas
Germany
Austria
Belgium
Spain
Finland
France
Ireland
Italy
Luxemburg
Netherlands
Portugal
Greece
57
Chart 42
0
0,1
0,2
0,3
07/0
408
/04
09/0
410
/04
11/0
412
/04
01/0
502
/05
03/0
504
/05
05/0
506
/05
07/0
508
/05
09/0
510
/05
10-year interest rate spread, %
(daily data)
sources: Central Banks
Italy - Germany
58
III - UNITED KINGDOM
59
ACTIVITY : WEAKER GROWTH
Manufacturing activity has bottomed out stagnant retail sales after a period of moderation following the
cooling of the housing market business and financial services remain dynamic
INFLATION : ABOVE BUT CLOSE TO 2% TARGET
inflation at 2.4 % in August 2005 favourable base effects (energy) in the coming months however: retail prices are less responsive to sluggish sales
60
RISK : MAINLY ON THE DOWNSIDE
housing market - cooling could be faster than anticipated wages - generous pay settlements could push inflation up and
undermine competitiveness
POLICY : THE WRONG MIX
Fiscal policy : too accommodative - economy is close to potential but deficit is close to 3% GDP
Monetary policy : MPC shows no appetite for further easing after August rate cut
61
Chart 43
-6
-4
-2
0
2
4
6
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
y/y %
q/q, annualized %
UK : real GDP growth, %
source: ONS
62
Chart 44
-10
-5
0
5
10
15
20
25
30
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
UK : house price and retail sales
( y/y % change)
sources: Halifax, ONS
All houses price
Volume of non-food retail sales
63
Chart 45
40
45
50
55
60
65
97 98 99 00 01 02 03 04 05
Euro zone
UK
UK/Euro zone : PMI manufacturing
source: Reuters
64
Chart 46
-10
-5
0
5
10
15
20
25
30
35
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
60
80
100
120
140
160UK : house price and loans on dwellings
House price, y/y % change
sources: Halifax, Bank of England
Number of loans on dwellings approved,
thousand
65
Chart 47
-8
-6
-4
-2
0
2
4
93 94 95 96 97 98 99 00 01 02 03 4 05f 06f
35
40
45
50
55UK : public budget and debt as % of GDP
Public debt(Maastricht definition)
Public sector balance
sources: OECD, BNPParibas
66
Chart 48
0
2
4
6
8
10
12
14
16
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
UK : interest rates
Base rate
10-year bond yield
(monthly average, %)
source: Bank of England
Harmonised inflation, y/y %
67
IV - JAPAN
68
JAPANESE ECONOMIC RECOVERY GOES ON GDP growth has been booming during H1 (4.5% saar) and should
slow somewhat in H2 ...both investment and consumption should back domestic recovery
HOUSEHOLD CONSUMPTION RECOVERY SEEMS WELL ROOTED
Private consumption has been booming in H1, in line with the fall in the jobless rate …
… and the expectation of an end to deflation Furthermore, wages, which are positively correlated with a lag to
corporate profits, have resumed since the beginning of this year
69
WHAT CHANGES IN MONETARY POLICY?
Core CPI (excl. fresh food) are still in negative territory (-0.2%) but much less than before (-1% early 2003)
A very moderate increase in prices is expected to show up next year Then, the BOJ will shift for its quantitative easing to an interest rate
objective The yen is likely to strengthen versus the dollar
70
IT IS KEY TO ACHIEVE FISCAL SUSTAINABILITY
The public deficit represents 7% of GDP and the public debt 170%
Primary fiscal deficit is 6%; a stabilization of the debt ratio requires 1.5% of primary surplus
A complete reshuffle of Japan’s tax system as well as a continuation of structural reforms are absolutely perquisite to raise Japan growth potential and help the country cope with the challenge of its ageing population.
71
Chart 49
-4
-3
-2
-1
0
1
2
3
4
5
95 96 97 98 99 00 01 02 03 04 05
Japan : GDP growth, y/y %
Nominal GDP
Real GDP
source: Cabinet Office
Real Domestic demand
72
Chart 50
-30
-20
-10
0
10
20
30
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Japan : exports growth
Exports to the USA
Exports to Asia(3-month moving average of the y/y %)
source: MoF
73
Chart 51
-6
-4
-2
0
2
4
6
95 96 97 98 99 00 01 02 03 04 05
-24
-18
-12
-6
0
6
12
18
24 Japan : consumption and investment
Public investment
Household consumption
(volume, y/y %)
source: Cabinet Office
74
Chart 52
-50
-40
-30
-20
-10
0
10
20
30
40
50
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Japan: profits and business climate
Current profits, all industries, y/y % change
Tankan surveys: business condition, forecasts, all enterprises, %
sources: MoF, Tankan (Bank of Japan)
75
Chart 53
0
10
20
30
40
50
60
70
80
90
100
110
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
-25
-20
-15
-10
-5
0
5
10
15
20
25
30Japan : orders and leading indicator
EPA leading indicator
Orders for machines,
y/y % change
source: Cabinet Office
(3-month moving averages)
76
Chart 54
99
100
101
102
103
104
105
106
107
108
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
1,5
2
2,5
3
3,5
4
4,5
5
5,5
6The labour market in Japan
Unemployment rate, %
Total employment (index 01/90 = 100)
source: Ministry of Labour
77
Chart 55
-4
-2
0
2
94 95 96 97 98 99 00 01 02 03 04 05
0,4
0,5
0,6
0,7
0,8
0,9
1Japan : employment growth and job offers to applicants ratio
source: Ministry of Labour
Full-time employees, y/y %
Job offers to applicants ratio
78
Chart 56
-4
-2
0
2
4
6
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
6
8
10
12
14
16
sources: Ministry of Labour, Ministry of Public Management, OCDE
Taux d'épargne des ménages
Japan : wages, inflation and saving rate
(* y/y % change)
Consumer priceindex*
Average earnings* (6-month moving average)
79
Chart 57
0
1
2
3
4
5
6
7
8
9
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
80
90
100
110
120
130
140
150
160
170% Japan : interest & exchange rates
(monthly average)
USD/JPY exchange rate
3-month interest rate
10-year interest rate
sources: BoJ, Reuters
80
V - CHINA
81
Economic growth still strong, although moderating from 9.5% in 2004 to 9%- 8% in 2006-07.
Significant effect of restrictive measures to reduce economic overheating (credit growth under control) Inflation is subdued : the control of domestic prices limits the impact of high global oil prices Low impact of the change from the peg to a currencies basket system : de facto still highly controlled exchange system despite some liberalisation Comfortable external financial position : large current surplus, huge foreign reserves
82
But some negative factors to monitor :
Strong external trade tensions and difficult trade compromises could hamper exports prospects Renewed doubts about statistical reliability Increasing social tensions Rising costs continuously erode corporate margins and increase local firms vulnerability to an economic downturn (especially for sectors in excess of supply)
All in all, over medium term growth potential still strong but possible reversal of current business cycle over short term and adjustments at the microeconomic level
83
Chart 58
China: real GDP growth, %
0
2
4
6
8
10
12
14
16
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05f 06f
sources: China Stat. Info. & Service Centre, BNP Paribas
84
Chart 59
0
5
10
15
20
25
98 99 00 01 02 03 04 05
China: monetary aggregate M2 and loans growth (y/y %)
source: Bank of China
M2
Loans
85
Chart 60
-10
-5
0
5
10
15
20
25
30
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Consumer prices
Retail prices
Producer prices
China: inflation (y/y %)
source: National Bureau of Statistics of China
86
Chart 61
0
10
20
30
40
50
60
01-01 07-01 01-02 07-02 01-03 07-03 01-04 07-04 01-05 07-05
0
1
2
3
4
5
6
7
8
sources: NBS, BNP Paribas
China: FAI growth and real interest rate
Real loan rate, 5 to 10 years, %
Fixed assets investment, y/y %
87
Chart 62
0
2
4
6
8
10
12
14
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
China: interest rates, %
source: Bank of China
Discount rate
Prime lending rate
88
Chart 63
-4
-3
-2
-1
0
1
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05f 06f
China: fiscal balance as % of GDP
sources: China Stat. Info. & Service Centre, BNP Paribas
89
Chart 64
-40
-20
0
20
40
60
80
100
120
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Total
with USA
with Japan
China: foreign trade balances
source: General Administration of Customs
(monthly data, 1-year cumulative, billion USD)
90
Chart 65
-20
-10
0
10
20
30
40
50
60
70
98 99 2000 01 02 03 04
China: balance of payments (billion USD)
Current-account balance
Net direct investment
Net Errors & Omissions
sources: China Stat. Info. & Service Centre, BNP Paribas
91
Chart 66
0
5
10
15
20
25
2001 2002 2003 2004 2005
120
125
130
135
140
145
China: banking liquidity
sources: Bank of China, DRIASIA
Real loans growth,y/y % Deposits
as % of loans
92
List of charts
1 : World GPD and trade growth 2 : Oil price and world growth 3 : Nominal and real oil price 4 : Output gap
I - UNITED STATES
charts n° 5 to 25
5 : Real GDP growth and ISM 5bis : Consumer confidence of the Conference Board 6 : Household income 7 : Compensation and employment 8 : Participation and unemployment rates 9 : Household consumption and saving 9bis : Residential investment as % of GDP 10 : Mortgage applications
93
11: Household debt and investment 12 : Home equity loans as % of household mortgage debt 12bis : Household debt and delinquency rate 12ter : Housing affordability index and household debt payment 13 : GDP growth and GDP deflator/unit labor cost ratio 13bis : Corporate profits and nonresidential investment 14 : Capacity utilisation rate and private investment 14bis : Corporate financing gap and investment as % of GDP 15 : 10-year interest spread and Senior loan officer survey 16 : Labor costs and inflation 17 : Core inflation 18 : Price expectations 19 : Interest rates and inflation 20 : Nominal interest rates from the end of recession 21 : Real interest rates from the end of recession 22 : Current-account & budget balances and savings 22bis : Public receipts and expenditures as % of GDP 23 : Purchases of US Treasuries 24 : USA/Euro zone, interest and exchange rates 25 : External position
94
II - EURO ZONE
charts n° 26 to 42
26 : Real GDP growth, USA, Japan, Eurozone 27-28 : PMI and GDP growth 29 : Consumer confidence and private consumption 30 : GDP and employment growth 31 : Eurozone/USA, unemployment rate 32 : Effective exchange rate and real exports 33 : Real GDP components growth/country 34 : Repo rate and inflation 35 : Labor cost, productivity and GDP deflator growth 36 : M3 and credit growth 37 : M3 and target 38 : Monetary aggregate growth 39 : Nominal GDP / M3 40 : OATei and expected inflation 41 : Fiscal balance/country 42 : Italy/Germany, 10-year interest rate spread
95
III - UNITED KINGDOM
charts n° 43 to 48
43 : Real GDP growth 44 : House price and retail sales 45 : UK/Euro zone, PMI 46 : House price and loans on dwellings approved 47 : Public budget and debt 48 : Interest rates and inflation
96
IV - JAPAN
charts n°49 to 57
49 : Real GDP and domestic demand growth 50 : Exports growth 51 : Consumption and investment 52 : Profits and Tankan’s surveys 53 : Orders and leading indicator 54 : Labour market 55 : Employment growth and job offers to applicants ratio 56 : Wages, inflation and savings 57 : Interest and exchange rates
97
V - CHINA
charts n° 58 to 66
58 : Real GDP growth 59 : M2 and credit growth 60 : Inflation 61 : Fixed assets investment growth and interest rate 62 : Discount and lending rates 63 : Fiscal balance 64 : Foreign trade 65 : Balance of payments 66 : Banking liquidity
98
ECONOMIC RESEARCH DEPARTMENTPhilippe d'ARVISENET 33 1.43.16.95.58 [email protected] Economist
OECD COUNTRIESPhilippe d'ARVISENET
Eric VERGNAUD 33 1.42.98.49.80 [email protected] issues, forecasts
Caroline NEWHOUSE-COHEN 33 1.43.16.95.50 [email protected] economics
UNITED STATES, CANADAAlexandra ESTIOT 33 1.43.16.95.52 [email protected]
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