Release date 29. avgust 2022
Contraction in EA-19 manufacturing most pronounced in Germany
Slovenia’s GDP increased by 0.9% in Q2 q-o-q (seasonally and the calendar adjusted), which was more than in the Q1 (+0.7% q-o-q), but in line with our expectations (+1.0%). Government consumption fell (-1.6%) as that of households (-1.2%), while gross investments increased (+4.9%), but mainly due to the contribution of inventories (investments in fixed assets fell by 1.2%). Exports of goods and services increased by 2% in real terms (mainly because to rising growth in exports of services due to tourism and transport) but grew less than imports (+0.4%). At this point, we must point out the large difference between the dynamics of deflated goods imports (+0.3%) and the nominal imports (+45%). The real growth of imports of goods slowed down (from 1.4 to 0.3%) but the exports of goods increased from -2.3% to +0.3%, which means a positive contribution of foreign trade in goods to GDP growth on a quarterly basis. Source: Statistical Office of the Republic of Slovenia.
In the Q2, services producer prices were 3.2% higher q-o-q. Among the individual sectors, prices rose the most in catering (by 7.3%) and transportation sector (by 5.0%). They were higher in real estate business by 2.6%, in other miscellaneous business activities by 2.2%, in ICT by 1.6% and in professional, scientific and technical activities by 1.2%. The increase in prices was mainly due to the increase in the prices of input costs, partly also due to higher demand (catering). Source: Statistical Office of the Republic of Slovenia
More economic topics are below in the attachment.
The World Shipping Price Index measured by Drewry shows that shipping rates are still falling. For the 26th consecutive week, the weighted freight price (a composite indicator that measures the price of transportation between Shanghai and Rotterdam, Genoa, Los Angeles and New York) has fallen, and was almost 40% lower y-o-y. USD 6,000 is the average cost of shipping between Shanghai and four major ports in the US and Europe, which is still 64% above the 5-year average. The shipping freight price between Shanghai and Rotterdam fell to USD 8,000 (-42% y-o-y), while in the reverse direction it was just 1.2 thousand USD, reflecting much lower quantity and value of exports of European goods to China (-28% y-o-y). On the other hand, the price of transportation between New York and Rotterdam increased by 12% y-o-y (to 1.3 thousand USD), while between Rotterdam and New York it increased by 7% to 7 thousand USD. Source: Drewry Supply Chain Advisors
German ZEW indicator decreased slightly in August (by 1.5 points to -55.3) after the sharp drop in July. The assessment of the current situation also worsened (by 1.8 to -47.6). Financial experts based their pessimism on high prices and additional costs for heating and production. The financial sector is expected to perform better due to the increase in short-term interest rates. The indicator of economic expectations for the euro area decreased by 3.8 index points (-54.9), while inflation expectations for the euro area moderated. The median estimate for August inflation in the euro area (Reuters) is at 9% (8.9% in July), while ours is at 8.5%. For the years 2023 and 2024, financial experts expect 4.5 and 3% average annual inflation for the EA19, which is more than they expected back in May (3.5 and 2.5%). Higher energy prices contributed the most to the rise in expectations, and pressure on wage growth is also expected. Source: ZEW
Growth expectations and the dynamics of firm entry; Enisse Kharroubi; BIS Working Papers No. 1036; 24 August 2022. Available at: https://www.bis.org/publ/work1036.htm
Comment/Abstract: This paper argues that growth expectations are the key driver for firm entry. Based on a sample of euro area countries, it shows that more firms are created in response to past exits when the economy is expected to grow faster. Similarly, a drop in past entry weighs less on subsequent entry when the economy is expected to expand quickly. In addition, it finds that the economic outlook affects firm entry mainly through expectations of public and private investment. This suggests that policies focused on increasing private and public investment can often help to strengthen the economy's supply side, by increasing firm entry and business dynamism.
HICP, EA-19, August, (31 August), Eurostat; +8.5% y-o-y
Comment: This time we are estimating a drop in HICP (8.9% in July), mainly due to lower fuel prices in EA countries. Meanwhile the median independent analysts expect a higher increase (+9.0%).
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