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Wed, 26th April 2017

Anirudh Sethi Report

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Archives of “Economy” Category

China Q4 GDP :6.8% y/y (expected 6.7%, prior 6.7%)

The run of solid GDP results remains unbroken

Q4 GDP: 6.8% y/y BEAT
  • expected 6.7%, prior 6.7%
The latter part of 2016 saw enhanced economic stimulus from Chinese authorities, a subsequent stabilisation & growth in economic activity, and an accompanying surge in property prices as liquidity sloshed out of the real economy (if it even got there in the first place). Still, mustn’t grumble.
            Headlines via Reuters:
  • Q4 2016 GDP +1.7 pct q/q s/adj (reuters poll +1.7 pct)
  • China revises Q1 2016 gdp to +1.3 pct q/q vs +1.2 pct q/q
  • China stats bureau says economy still faces complex internal, external environment
  • China 2016 gdp +6.7 pct y/y
  • China revises Q4 2015 GDP to +1.5 pct q/q vs +1.6 pct q/q
  • China stats bureau says foundation for stablisation, improvement in economy still not solid

 

Chinese Province Admits It Fabricated Economic Data For Three Years

While it will hardly come as a surprise to China watchers who have for years mocked China’s cooked “data”, overnight the state-run People’s Daily reported that the severely impacted by the commodity crunch of the past 2 years rust-belt province of Liaoning fabricated fiscal numbers from 2011 to 2014, citing local officials have said, raising fresh doubts about the accuracy of China’s economic data just two days ahead of the release of China’s GDP report.


The city of Shenyang in Liaoning province of China

 City and county governments in the northwestern region committed fiscal data fraud in the period, Governor Chen Qiufa said at a meeting with provincial lawmakers Tuesday, Bloomberg adds. Not surprisingly, the fabricated economic data was meant to show a state of economic strenght with fiscal revenues inflated by at least 20%, and some other economic data were also false, the paper said, without specifying categories.

Why paint a rosier picture? The same reason as alwasy: Chen said the data were made up “because officials wanted to advance their careers.” The fraud misled the central government’s judgment of Liaoning’s economic status, he said, citing a report from the National Audit Office in 2016.

The admission of fraud comes now because with growth now moderating, officials have “sought to improve the credibility of economic data” as diffusing financial risks becomes a key policy consideration, along with keeping growth ticking along at a rapid clip.

And while the outgoing Obama administration is cracking down on “fake news”, Ning Jizhe, head of the National Bureau of Statistics, has said China is focusing on preventing “fake economic data” as well as increasing the quality of its statistics. Naturally, incidents such as this one will make China watchers that much more skeptical.

Fake economic data may be the least of Liaoning’s worries which in recent years has seen an unprecedented purge of more than 500 deputies from its legislature Bloomberg reports. The deputies were implicated in vote buying and bribery in the first provincial-level case of its kind in the Communist Party’s almost seven-decade rule, according to the official Xinhua News Agency. Former provincial party chief Wang Min, who led Liaoning from 2009 until 2015, was earlier expelled following corruption allegations by China’s top anti-graft watchdog.

As China’s debt-fueled economic impulse continues, if only for a few more months, we wxpect more such instances of fake data to swim to the surface.

Eurozone construction output up 0.4% in November

Construction output across the eurozone climbed in November for the second month in a row, but the annual rate cooled sharply.

Output rose by 0.4 per cent in November from October, matching the previous months’ pace that was revised lower from a rise of 0.8 per cent. Production in construction was steady on a year-on-year basis, compared with a 1.8 per cent advance in October.

The rate of growth in the building of residential and commercial buildings slowed to a month-on-month rate of 0.3 per cent, from 0.8 per cent in November. In contrast, the civil engineering component, which includes structures like railyways, was up by 1.7 per cent after a 2.3 per cent dip in the prior month.

Activity was robust in Germany, the eurozone’s economic powerhouse, increasing by 1.5 per cent. However, it dipped by 0.2 per cent in France, the bloc’s No. 2 economy.

World’s fastest-growing large economy – the two-horse race with a new leader

China is the new fastest-growing large economy says the IMF

The Fund has published its report for 2016 growth rates
  • Says India shot itself in the foot (there’s a lot of that going around) when it cancelled 90% of its cash in circulation
(ps. I’ll quit it with the mixed metaphors now)
India’s growth slowed to 6.6% in 2016 from 7.6% in 2015
  • China’s economy grew by 6.7% in 2016
IMF says 2017 growth in India, though, is expected to be 7.2%, which will put it back in front
Then 7.7% projected for 2018
  • China forecast is 6.5% in 2017 % 6.0% the following year

(ps. The IMF admits these forecasts are unlikely to be precise)

IMF says demonetisation a big dampener, cuts India’s growth to 6.6% from 7.6%

The IMF today cut India’s growth rate for the current fiscal year to 6.6 per cent from its previous estimate of 7.6 per cent due to the “temporary negative consumption shock” of demonetisation, days after the World Bank also decelerated India’s growth estimates.

“In India, the growth forecast for the current (2016–17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative,” the International Monetary Fund (IMF) said in its latest World Economic Outlook (WEO) update released today.

The IMF said that after a lacklustre outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging market and developing economies.

Economic activity in both advanced economies and emerging market and developing economies (EMDEs) is forecast to accelerate in 2017–18, with global growth projected to be 3.4 per cent and 3.6 per cent, respectively, again unchanged from the October forecasts, it said.

As per new IMF projections, India’s growth in 2016 is now estimated to be 6.6 per cent as against 7.6 per cent earlier forecast.

IMF economist Obstfeld: Debt presents overhang to world economy

Comments from IMF economist Obstfeld after the latest world growth estimates

  • We see wider dispersion of risks, tilted to the downside
  • Trade disruption is a downside risk that isn’t included in baseline case
  • Effects of Brexit are likely to be complex
  • A US fiscal expansion would have positive spillover effects
  • We know direction of US policy but not the specifics
  • All nations would lose from a trade war
  • Some US proposals could hurt the US even without a trade war
  • Fixing Italy’s banking sector would boost growth
  • Fed independence must be maintained and a strict legal rule would tie it’s hands

IMF leaves 2017 global growth outlook at 3.4% but country forecasts shaken up

No change to the global outlook but many country tweaks for 2017

  • UK growth seen at +1.5% vs +1.1%
  • US seen at 2.3% vs 2.2%
  • Eurozone seen at 1.6% vs 1.5%
  • Italy seen at 0.7% vs 0.9%
  • Japan seen at 0.8% vs 0.6%
  • Canada unchanged at 1.9%
  • India seen at 7.2% vs 7.6%
  • China seen at 6.5% vs 6.2%
  • Brazil seen at 0.2% vs 0.5%
  • Mexico seen at 1.7% vs 2.3%
  • Saudi Arabia seen at 0.4% vs 2.0%

Lots of winners and losers on that list. In general, Latam and the Middle East drag down small improvements in developed countries. For 2018, they see global growth picking up slightly to 3.6%.

For many years, the IMF has released high estimates and then lowered them as they neared. For a change, they’re raising them. That might just reflect the optimism in the air.

November 2016 Eurozone trade balance 22.7bn vs 20.8bn exp SA

Details of the November 2016 Eurozone trade balance 16 January 2017

  • Prior 19.7bn. Revised to 19.9bn
  • Exports SA 3.3%
  • Imports SA 1.8%
  • 25.9bn vs 24.3bn exp. Prior 20.1bn NSA
  • Exports NSA 6.0% vs -5.0% prior
  • Imports NSA 5.0% vs -3.0% prior

Amazing what a bit of currency manipulation gets you 😉

Eurozone trade balance

BOJ raises assessment for 3 of 9 regions, 6 unchanged

   That’s the (screenshot of the) summary of the summary, in very brief.
So that is slow going, but at least its moving in the right direction, For now.
This report summarizes the reports from all regional research divisions, mainly at the Bank’s branches in Japan, and is based on data and other information gathered for the meeting of general managers of the Bank’s branches held today.