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Tuesday, June 9, 2009

Green Shoots In Germany and Estonia?

Well, I am busying myself this morning scratching around looking for green shoots in Turkey. But even as I was digging for these I couldn't help notice this coming in over the radar from Germany, courtesy of Bloomberg:

German exports fell more than economists forecast in April as the global crisis restrained demand, keeping Europe’s largest economy mired in a recession. Sales abroad, adjusted for working days and seasonal changes, fell 4.8 percent from March, when they rose a revised 0.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.1 percent decline in April, according to the median of 10 estimates in a Bloomberg News survey.
So German exports have not touched bottom yet - they are still falling. Since the German economy is export dependent, then this implies the obvious, the German economy is still contracting. I don't think anyone ever doubted this, but looking at the way some of the material has been presented recently, it wasn't always clear.

Indeed year on year, exports fell by 22.9%, the fastest rate so far, although since these annual stats are not working day corrected I wouldn't read too much into that just yet, since you really do need to average across March and April due to the Easter impact.

Another country where rather unsurprisingly we aren't seeing too many green shoots at the moment is Estonia, and only today the statistics office reported that exports decreased by 38% and imports by 41% (year on year) in April.

As a result the Estonian trade deficit rose for the second month running, and hit 1.8 billion kroons. So what we are seeing here is a distinct move in the wrong direction, on both counts.

We also learnt from the Estonian stats office today that GDP contracted by 15.1% (year on year) in the first three months of this year - a figure which was revised down from the earlier flash estimate of 15.6%.

Compared to the 4th quarter of last year, seasonally and working-day adjusted GDP decreased by 6.1% (more on all this in another post).

Finally on the green shoots front for today, we could note that Hungary's industrial production plummeted in April by 25.3% (year on year) according to working day adjusted data released by the stats office. This compares with a year on year contraction of 19.6% in March.

Month on month there was seasonally and working day adjusted drop of 5.1% in April, following 4.5% growth in March. So again, output is still falling, and no bottom has been reached.

This latest Hungarian data is particularly unpalatable following a number of reports which had been left open the possibility that the downturn in the Hungarian economy had ground to a halt, or at least staretd to decelerate. If industrial output shows similar weakness in other East European countries then this does not augur well for future German and eurozone output, since Hungary plays a significant role in the early stages of the European manufacturing production chain.


Anonymous said...

I just read about Arcandor filing for protection because they are about to go bankrupt. Some 43,000 jobs are uncertain now...
I guess Merkel's stimulas has not kicked enough to help this retailer survive...
But confidence seems to be the name of the game for now..and as such continues to "trump" any and all obvious shortcomings

Anonymous said...

Final thought,
I do admire Merkel's strong hand even in the midst of election year politics...she does seem to value where those tax euros are going...

Thank you Edward for the updates and commentary..as usual very insightfull to me..

Artos said...

Nice charts with balanced and intelligent commentary; thank-you.

A recent family visit to Germany was pleasant, as always. Friends and relatives continue to more-or-less enjoy the good life. But I was struck by the prevailing mood of resignation and shocked by the firm expectation of (possibly much) worse to come.

In Canada where we live the downturn has not been nearly as severe and so, with the arrival of spring, talk here of green shoots is thick on the ground, if you will. If one has a job it seems the stock market rally is proof enough that the corner has been turned.

Anonymous said...

Industrial Production worst on record for month ending April..
Frim Bloomberg:
BRUSSELS, June 12 (Reuters) - Euro zone industrial production shrank by more than a fifth in April compared to a year earlier, data showed on Friday, a new record contraction pointing to continued economic weakness. Production fell 21.6 percent in the 16-country area, the European Union's statistics office said, exceeding the previous record decline of 19.3 percent logged in March and economists' expectations of a 20.2 percent drop. Month-on-month, production fell 1.9 percent, far more than the 0.4 percent dip expected by economists in a Reuters poll. To see a table, click on The monthly and annual fall was led by plunging output of intermediate and capital goods in a sign investment continued to decline. The data contrasts with more optimistic signs from Japan, where April output gained 5.9 percent month-on-month in the biggest monthly rise for more than half a century, and from China, where factory output rebounded more than expected in May.

The ECB better have fingers and toes crossed that the Chinese, U.S, Russia etc... need Eu zone products(albeit at a higher price..don't forget the Euro has increased 10% in value to the dollar, making there goods less attractive in a very difficult export environment)..

Edward Hugh said...


"The ECB better have fingers and toes crossed that the Chinese, U.S, Russia etc... need Eu zone products"

This, I would say, is going to be very difficult indeed. Anyway, the next few months are going to be very interesting, so please stick around.