Schwerpunkt Außenwirtschaft 2016/17 Austrian economic activity, Austria's price competitiveness and a summary on external trade

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1 Schwerpunkt Außenwirtschaft /7 Austrian economic activity, Austria's price competitiveness and a summary on external trade Christian Ragacs, Klaus Vondra Abteilung für volkswirtschaftliche Analysen, OeNB also on behalf of Julia Wörz and Patricia Walter Vienna, th of June, 7

2 Moderate economic growth in World Advanced economies CESEE Emerging markets,,,,,7,,,9,,7,,,9,,, Dec. Jun Dec. Jun Dec. Jun Dec. Jun.7 USA,,,, Dec. Jun.7 Source: Eurosystem. UK,8,8,, Dec. Jun.7 8 China,7,,, Dec. Jun.7 - Russia -,,,, Dec. Jun

3 Weak dynamics in volume of world trade in World,,9, Advanced countries,9,8,9 CESEE,,,,7 Emerging countries,,,,,, Dec. Jun Dec. Jun Dec. Jun Dec. Jun USA,,,, Dec. Jun UK,,8,, Dec. Jun China, 8,,8, Dec. Jun Russia -,9,,, Dec. Jun 7 Source: Eurosystem

4 Euro area on stable growth path Forecast June 7 Revision to March Real GDP +,9% +,8% +,7% +, pp +, pp, pp HICP-inflation +,% +,% +,% -, pp -, pp -, pp Source: Eurosystem forecast from June 7. Country results: OECD forecast (June 7) Real GDP growth forecast 7 8 Germany +,8 +, +, France +, +, +, Italy +, +, +,8 Spain +, +,8 +, Netherlands +, +, +, Belgium +, +, +,7 Austria +, +, +,7 Ireland +, +,7 +, Finland +, +, +, Greece, +, +, Portugal +, +, +, Slovakia +, +, +, Luxembourg +, +, +, Slovenia +, +,8 +, Lithuania +, +, +,9 Latvia +, +, +, Estonia +,7 +, +, Source: OECD. HICP forecast 7 8 Germany +, +,9 +, France +, +, +, Italy, +, +, Spain, +, +, Netherlands +, +, +, Belgium +,8 +, +,8 Austria +, +, +,8 Ireland, +,8 +, Finland +, +, +, Greece +, +, +,8 Portugal +, +, +, Slovakia, +, +, Luxembourg +, +, +, Slovenia, +, +, Lithuania +,7 +, +,7 Latvia +, +,8 +, Estonia +,8 +, +,8 Source: OECD. Unemployment rate 7 8 Germany,,8,7 France, 9,7 9, Italy,7,, Spain 9, 7,, Netherlands,,, Belgium 7,9 7,, Austria,,7, Ireland 7,9,9, Finland 8,8 8, 8, Greece,,, Portugal, 9,7 8,9 Slovakia 9, 8, 7, Luxembourg,,,9 Slovenia 8, 7,, Lithuania Latvia 9,7 9, 8,9 Estonia,8 7, 8, Source: OECD

5 but continuing heterogeneous development Real GDP Index: 8Q= Index: 8Q= Real GDP SK Cumulated GDP-growth 7 and 8 % SI ES NL DE 9 9 AT PT 9 9 GR 8 8 FI 8 8 BE Germany France Italy Spain Source: Eurostat. Netherlands Austria Belgium Finland Greece Portugal Slovakia Slovenia FR IT 8 Remark:Yellow: Countries which were still below the GDP level of the beginning of 8 at the end of.. Source: OECD, spring forecast, June

6 Ratio of global trade to output growth dropped to one Ratio of global imports to GDP growth Index: 99= Historically, the volume of world merchandise trade grew about. times faster than world output. In the 99s, it grew twice as fast Since the financial crisis, this ratio has fallen to around marks the first time since that the ratio drops below one (.) Source: IMF

7 Negative repercussions of protectionism could harm world trade in the future Increasing signs of a potential inward-looking stance in economic policies, especially in the USA, but also in other countries, would impact world trade growth negatively, also curbing future supply-potential. WTO reports in a widely noted article new trade-hampering measures per month in the period October May by WTO members. This marks the highest value since. Since 8, around trade restricting measures were introduced, while only 7 have been withdrawn. This comes in addition to the dampening trade effects of slowing trade liberalization (or plain termination of negotiations, i.e. TPP) and levelling off of global value chain growth

8 Austria: Broadly based upswing in 7 Percentage points of GDP growth,,,,,,,7,9,, Forecast,7,,, -, -, Source: WIFO, OeNB. Net exports Changes in inventories and statistical difference Private consumption Total investment Government consumption GDP: Dec. Forecast GDP expenditure

9 Austria: 7 marked by accelerated economic growth and declining unemployment GDP,,,7, Private consumption,,,, Government consumption,9,9,8,8 Total investment,,,,7 Exports,8,,,9 Imports,,7,8, Contributions to real GDP grow in percentage points Domestic Demand,8,8,, Net exports -,8,,, Changes in inventories (+ stat. discrepancy),,,, in % HICP,,,8,8 Unemployment rate (in %),,7,, Employees,,,, in % of GDP Current Account,7,,,8 Government Balance -, -,9 -,9 -, Source: WIFO, OeNB. : With the help of special effects, real GDP growth rose again - after four weak years - to over % 7: Real GDP growth accelerates sharply The tax reform, the persistently strong employment growth and the better sentiment support consumption growth The recovery of world trade is boosting export demand and revitalizing Austrian exports HICP inflation increases to % Unemployment rate declines to.% Current account improves Public finances improve

10 Explanation of strong GDP upward revision for 7,7,,,,,,, Real GDP-growth historical Difference to previous quarter in % Jun. 7 Dec. Compared to the OeNB's December forecast, GDP growth for 7-9 is revised upward by.7 /. /. percentage points (pp). Ex-post-facts (account for, pp): Significantly higher GDP growth in Q and 7Q than expected in December Stronger growth in both domestic demand and exports,7,,,,,,, Real GDP-growth, including forecast for 7 Difference ot previous quarter in % More optimistic assessment of short-term development: Better starting point Further improvement of confidence indicators The upturn is reflected in industry and construction Stronger investment cycle Improved external environment Source: WIFO, OeNB. Jun. 7 Dec

11 Significant acceleration of exports this year Change on previous year in % 7, Forecast 99= 9 Contributions to growth of Austrian export markets, Growth to previous quarter in %,, 9,,,,,,,,,8,9,,,,,9, 9 9 9,,,, 9,, Source: Eurostat, OeNB. Exports, real Austrian export markets Export market shares (RHS) 9 -, Rest of the world America Asia Remaining Europe Source: ECB, design and calcuation: OeNB

12 European commission constitutes no major external imbalances External imbalances and competitivenes indicators in the EC Scoareboard Current Account balance in % of GDP, 8,,, -, -8, -, 9 Export market shares in % of GDP,, -, -, -, -, -, 9 Net international investment position in % of GDP,, -, -, -, -, -, 9 Nominal unit labour cost index in % of GDP,, 8,,,,, 9 Real effective exchange rate in % of GDP, 8,,,,, -, -, -, -8, -, 9 Source: Eurostat

13 Travel developed as main pillar of Austria s external economy Austria's external economy "in balance" (MIP) Travel confirms its role as main pillar EUR bn % of GDP EUR bn % of GDP Income and current transfers (left axis) (linke Achse) Travel (left axis) (linke Achse) Business services (left axis) (linke Achse) Goods (left axis) (linke Achse) Current account in % of GDP (right axis) (rechte Achse) Sources: OeNB, Statistics Austria Travel expenditures (left axis) (linke Achse) Expenditures on business services (left axis) (linke Achse) Travel receipts (left axis) (linke Achse) Receipts from business services (left axis) (linke Achse) Balance in % of GDP (right axis) (rechte Achse)

14 Dynamics in services exports modest, but outpace goods Growth in goods exports turned negative Growth contribution in in pp, Growth rates in % Growth in business services slowed down Growth contribution in in pp, Growth rates in % Food, basic materials, energy Chemical goods Manufactured goods Mashinery, vehicles Final goods Goods exports total Transport Technical services Consulting services Insurance and financial services Others Business services exports total Sources: OeNB, Statistics Austria

15 ADDITIONAL SLIDES - -

16 Recent developments: record low trade growth in World trade grew by.% in, the lowest growth rate since the global financial crisis. Imports of advanced economies grew moderately due to investment slowdown and inventory adjustment. Imports stagnated in developing countries following an initial decline (financial turbulence in China, low commodity prices) and a resumption of growth from the nd quarter onwards. In value terms, world trade growth was negative again (like in ). Longer-term structural reasons behind historically weak trade growth: o slower growth in global value chains o slowing trade liberalization related to growing disillusionment with globalization Like in, global trade growth fell short of world output growth

17 Moderate economic growth in Real GDP growth Change to previous quarter in %, Change to previous quarter in %, Change to previous quarter in %,,,,,,,,,,,,,,,,,,, -, -, -, -, -, -, -, Q 7Q 8Q 9Q World Advanced Economies CEE EU Countries Emerging Markets Source: Eurosystem, June forecast. -, Q 7Q 8Q 9Q United States Japan United Kingdom Euro Area -, Q 7Q 8Q 9Q China India Russia Brazil

18 Weak dynamics in volume of world trade Real import growth Change to previous quarter in %, Change to previous quarter in %, Change to previous quarter in %,,,,,,,,,,,,,,,,,,, -, -, -, -, -, -, -, -, -, -, Q 7Q 8Q 9Q World Advanced Economies CEE EU Countries Emerging Markets -, Q 7Q 8Q 9Q United States Japan United Kingdom Euro Area -, Q 7Q 8Q 9Q China India Russia Brazil Source: Eurosystem, June forecast

19 Moderate economic growth in GDP growth in selected advanced and emerging economies real GDP (seasonally adjusted; %-change to previous period q 8q q q q q Japan United Kingdom USA Euro area - q 8q q q q q Brazil India Russia China Source: OECD

20 Weak dynamics in volume of world trade Real export growth in selected advanced and emerging economies -month moving average, = World Advanced economies USA Japan Euro area Source: CPB world trade monitor World Emerging economies Asia Latin America Africa and Middle East - -

21 Outlook: trade recovery in 7 IMF expects world trade to grow by.8% in 7 (.9% in 8), thus outpacing global output growth again Factors supporting the recovery: o cyclical upswing in advanced economies, global investment demand recovers o Recovery in commodity prices improves macroeconomic conditions for developing and emerging economies Uncertainty remains high, various downside risks mainly dure to policy uncertainty: o Geopolitical tensions o Increasing protectionist tendencies o Withdrawal of measures to stabilize the financial system o Sharply increasing interest rates in the USA - -

22 Travel profits from developing city tourism Overnight stays of foreign guests 99 Total: 87 mn mn mn mn < mn mn mn mn mn 7 mn 8 mn 7 mn mn mn Source: Statistics Austria

23 Travel profits from developing city tourism Total: mn Overnight stays of foreign guests mn mn mn < mn mn mn mn mn 8 mn mn mn mn 8 mn Source: Statistics Austria