Market Mover - BNP PARIBAS - Investment Services India

Key Data Preview
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105
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Chart 1: Eurozone Growth & Sentiment
EC Survey:
Economic Sentiment
GDP (% y/y, RHS)
55
-6
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
Seas. Adjusted Q4 09 (f) Q3 09 Q2 09 Q1 09
GDP % q/q 0.4 0.4 -0.1 2.5
GDP % y/y -1.8 -4.0 -4.8 -5.0
Key Point:
Survey data signal another robust q/q growth rate in
Q4 although ‘hard’ data highlight the continued
weakness of consumer demand.
5
4
3
2
1
0
-1
-2
-3
-4
-5
BNP Paribas Forecast: Picking Up
Eurozone: GDP (Q4 2009, ‘Flash’ Estimate)
Release Date: Friday 12 February
We forecast that eurozone GDP will continue to expand on
a q/q basis in Q4, consistent with the high level of
improvement in a range of leading indicators of activity.
Our prediction of a q/q rate of increase of 0.4% is broadly
in line with the pointers from the reliable survey data such
as the PMI. The industrial sector remains pivotal to the
rebound in the economy. Industrial production is forecast to
expand by over 1% q/q for the second consecutive quarter
after five consecutive contractions up to Q2 2009.
Looking at GDP by expenditure components, exports will
again expand on the basis of the trade figures released for
Q4 to date. Domestic demand, however, remains weak.
Private consumption has increased only once in the past
six quarters on a q/q basis, in Q2 2009, boosted by car
purchase incentives. Retail sales data for Q4 to date point
to another contraction in Q4. Investment has fallen on a q/q
basis for six straight quarters though the rate of contraction
has been moderating.
The y/y rate of contraction in GDP will decelerate markedly
due to base effects and, for the same reason, a return to
positive rates of change is likely from Q1 2010 (see chart).
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
Chart 2: German GDP
-4.0
-7.0
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
% y/y (RHS)
% q/q
Seas. Adjusted Q4 09 (f) Q3 09 Q2 09 Q1 09
GDP % q/q 0.4 0.7 0.4 -3.5
GDP % y/y -2.1 -4.8 -5.8 -6.7
Key Point:
Surveys signal another solid q/q rise in GDP, driven
by external rather than domestic demand.
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
-5.0
-6.0
BNP Paribas Forecast: External Boost
Germany: GDP (Q4 2009, ‘Flash’ Estimate)
Release Date: Friday 12 February
We expect German GDP to rise on a q/q basis for the third
straight quarter in Q4, albeit at a slower pace than Q3. The
y/y rate of contraction in GDP will decelerate markedly due
to base effects and a return to positive rates of change is
highly probable from Q1 2010 onwards.
The rebound in global manufacturing activity is pivotal to
the pick-up in activity in Germany. Industrial production is
on course to deliver another strong q/q increase in Q4.
Consistent with the global upswing and continued poor
state of domestic demand, the main contribution to growth
in GDP in Germany will be net exports. The trade data for
Q4 to date point to an unusually high contribution from net
trade, outweighing what is likely to be another very weak
quarter for private consumption.
Private consumption fell by 0.9% q/q in Q3, the biggest fall
in ten quarters. This follows two unusually strong quarters,
driven by car purchase incentives. The latter are likely to
have brought demand forward from 2010 which, combined
with what we expect will be a further rise in unemployment
this year, will weigh on spending. Retail sales data for Q4
point to the sixth q/q decline in seven quarters.
Investment is likely to be subdued by high uncertainty and
low capacity utilisation rates.
Market Economics 12 February 2010
Market Mover
47
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