Quarterly Bulletin Q3 2013

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54 Developments in the International Quarterly Bulletin 03 / July 13 and Euro Area Economy Table 1: Changes in real GDP in selected economies Percentage Change 2012 2013 f 2014 f Global 3.0 3.1 4.0 United States 2.2 1.9 2.8 Euro Area -0.5 -0.6 1.1 United Kingdom 0.3 0.8 1.5 China 7.8 7.8 8.4 Japan 2.0 1.6 1.4 Source: OECD Economic Outlook no. 93 May 2013 f Forecast United States and Japan in the absence of credible medium-term consolidation plans. There is also a risk that potential growth rates may be lower than currently estimated following the global economic crisis. Further, the outlook in the euro area and surrounding countries is dependent on fiscal policy developments as high government debt ratios could also expose countries to volatile financial market sentiment. Despite weaker-thanexpected output growth, most countries are close to stabilising their government debt-to- GDP ratios and ensuring a gradual decline in indebtedness over the longer term. Growth in many emerging countries remains buoyant but has moderated according to their first quarter GDP data releases, mainly due to local capacity constraints. Significantly, China’s growth slowed to an annualised 7.7 per cent in Q1 2013 from 7.9 per cent in the final quarter of 2012. Headline inflation has generally decreased across the world over the past number of months, driven primarily by declining energy prices. OECD-measured global inflation has fallen to 1.5 per cent from 2.1 per cent a year earlier, and it is projected to stay close to this level through 2014. Consumer inflation rates of food and other goods and services have remained stable across a number of advanced economies. Among developing and emerging economies, inflation pressures have become more broad-based reflecting some capacity constraints and an increasing weight of nonfood commodities in consumption baskets. Monetary policy tightening has started in some 65 60 55 50 45 40 35 30 25 emerging economies as a result. Euro area inflation rates have remained low in recent months. Ample spare capacity together with a reduced contribution from energy prices should ensure that inflation expectations remain well-anchored. Feb Chart 1: Global Purchasing Managers’ Index Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2008 2009 2010 2011 2012 2013 Composite Output / Business Activity Index Composite New Orders / Incoming New Business Index Manufacturing New Export Orders Index Source: Markit. Note: For PMI indicators, above 50 represents expansion, below 50 represents contraction.
Developments in the International and Euro Area Economy Quarterly Bulletin 03 / July 13 55 Chart 2: Selected Global Inflation Rates Chart 3: G3 GDP Growth Rates 12 % Year-on-Year Change 1.2 % Quarter-on-Quarter Change 10 1.0 0.8 8 0.6 6 0.4 4 0.2 2 -0.0 -0.2 0 -0.4 -2 -0.6 -4 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May -0.8 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 2012 2013 Brazil China Euro Area India Japan United States United Kingdom 2012 2013 2012 2013 2012 2013 US UK Euro Area Source: Thomson Reuters Datastream. Source: Thomson Reuters Datastream. Section 1: Euro Area Economic Growth – Recent Developments The euro area remained in recession in the first quarter of 2013, and has recorded six consecutive quarters of declining GDP. The contraction of 0.2 per cent was broadly in line with expectations and an improvement on the preceding quarter. Four out of the five largest euro area economies are experiencing recession: the main drivers of the Q1 2013 contraction were Italy and Spain, each recording a decline in GDP of 0.5 per cent. France is now in technical recession, following a second quarter of contraction. In contrast, Germany recorded a return to weak growth of 0.1 per cent, a little below expectations. Domestic demand continues to exert a significant drag on GDP growth across the euro area. In particular, investment has declined for the eighth consecutive quarter. In contrast, private consumption grew by a marginal 0.1 per cent in Q1 2013, following five consecutive quarters of contraction. The contribution from net exports to GDP growth was also marginally positive in Q1 2013, reflecting further declines in imports arising from weak domestic demand conditions, while exports faltered over the quarter against a background of subdued global import demand. High frequency data were mixed in the second quarter of 2013. Conditions in retail sales remain challenging as low levels of consumer confidence continue to weigh on consumer spending. Activity during Q1 2013 was marginally up relative to the preceding quarter, while data for April again suggested a difficult trading environment as retail sales declined 0.5 per cent relative to March. Industrial production showed some tentative signs of stabilisation in the three months up to April, most notably in capital goods where monthly gains have been recorded each month since February. The improved industrial production data reflect solid conditions in Germany, while activity in the rest of the euro area remains flat. More recent survey data point to an easing in the rate of decline in the euro area as a whole. The EU Commission’s Economic Sentiment Indicator (ESI) remains well below its longterm average value, with uneven monthly
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JULY 13 Q3 Central Bank Quarterly B
Page 5 and 6: Contents Section 1 Forecast Summary
Page 7 and 8: Section 1 Quarterly Bulletin 03 / J
Page 9 and 10: 7 Comment Annual National Accounts
Page 11 and 12: 9 The Domestic Economy Overview n A
Page 13 and 14: The Domestic Economy Quarterly Bull
Page 33 and 34: 31 An Timpeallacht Gheilleagrach Le
Page 35 and 36: 33 Financing Developments in the Ir
Page 37 and 38: Financing Developments in the Irish
Page 55: 53 Developments in the Internationa
Page 59 and 60: Developments in the International a
Page 73 and 74: 71 EU-IMF Financial Assistance Prog
Page 75 and 76: EU-IMF Financial Assistance Program
Page 77 and 78: EU-IMF Financial Assistance Program
Page 79 and 80: 77 Developments in EU Financial Ser
Page 81 and 82: Developments in EU Financial Servic
Page 83 and 84: Developments in EU Financial Servic
Page 87 and 88: Analysis of Recent Monetary Operati
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Statistical Appendix Quarterly Bull
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Quarterly Bulletin Q3 2013

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