Valentina Romei

Labour productivity continues to fall in the UK, today’s latest ONS release shows.

Output per hour dropped by 0.2% in Quarter 3, 2012, compared to the previous quarter. This means a fall of over 2% compared to the same period last year and over 3% compared to the pre-crisis period. This is a particularly striking drop considering than in the five years before the financial crisis labour productivity rose by over 12%.

The reasons for this remain rather a puzzle. And a look at other European countries confirms that the UK is unusual. But it’s not unique. Most core European countries had a drop in productivity levels compared to those in the US. But their performance varied considerably during the last few years of economic crisis, as this chart highlights … Read more

Valentina Romei

At the start of this year, Mario Monti, the Italian prime minister, unveiled a programme of liberalisation, which together with austerity measures were meant to put the country back on track for growth.

The package triggered protests from taxi drivers, pharmacists, petrol station operators and lawyers – all professions that were included in the liberalisation plan. The measures also targeted the gas and electricity market, the insurance sector and local public services. The aims of these plans were to reduce the costs of goods and services to consumers and to foster competition among providers, with cheaper products and services making the austerity measures easier to digest.

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Valentina Romei

Chinese exports grew less than expected in November, fueling fears of a further economic slowdown. But exports from western inland Chinese regions have never grown so fast as in 2012, beating export growth rates of the rich industrial coastal regions.

Chinese export growth declined to 2.9 per cent in November from 11.6 per cent in October. On a rolling 12-month sum exports grew at an annual rate of 7.9 per cent in November, a figure well below the more than 30 per cent growth of the late 2010 and early 2011 and marks a 28-month record low. But not all regions in China experienced the same slowdown.

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an investor looking at stock prices at a securities brokerage in ShanghaiChinese equities are in the doldrums. Both the Shenzhen composite and the Shanghai composite indices touched their lowest level in over three years this week, marking a loss for both indices of around 10 per cent since the start of the year.

But not all Chinese stocks are falling. Hong Kong’s Hang Seng China Enterprises Index, composed of mainland companies, is up by around 6 per cent. So stock selection matters. Chart of the week takes a look.

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Brazil is a commodity exporter – and even more so than official statistics suggest. The share of its exports taken by what are classified by the government as primary goods was just below 30 per cent for most of the past two decades, rising to nearly half of all exports in the last five years. But if we include items such as raw and refined sugar, unsweetened cocoa powder, crude soybean oil, cocoa butter and other products that have a level of processing but are closely derived from commodities dug up or harvested in the country, the proportion rises to different levels. Chart of the week takes a look.

The revised picture shows the shrinking role in trade played by Brazilian manufacturers and the vulnerability of Brazilian exports to the shifting tides of the global economy.

Using our broader classification, Brazil’s commodity-based exports rise to half of the total during the past two decades and to more than two thirds in the last year. The share of manufactured goods therefore falls from about half to less than a third – showing that growth in Brazilian exports has been driven entirely by commodity-based goods.

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Thailand’s economy grew at a 3 per cent year on year in the third quarter, a slight decrease from Q2 but in line with analysts’ expectations.

But as data released on Monday show, the pattern of the previous four quarters is now entrenched – Thai GDP is being dragged down by its poor export performance. Chart of the week takes a closer look.

As the chart below shows, Thailand’s economy would have grown at 4 per cent in the third quarter, a full percentage point higher, were it not for the negative net contribution of exports. Even so, things were better than they were during the previous three quarters, when the economy would have grown as much as 4 to 6 percentage points faster if it was not for the negative impact of exports.

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Valentina Romei

Today, World Diabetes Day, is a good time to look at what countries weigh. Not in economic heft or population numbers, but the actual physical weight of their population.

Specifically, we established countries’ share of the global population and their share of global weight (using data on their average body mass index (BMI) and their average height for the male population over 20 years old). Then we calculated the difference between these two measures.

The weightiest countries are the US, Mexico and Brazil: their share of the total global body mass is bigger than their proportion of the global population. All three countries have an average body mass index of above 25, which corresponds to being overweight. Read more

Partial results from Ukraine’s parliamentary election on Sunday suggest a narrow victory for the governing party of Viktor Yanukovich, president since 2010.

It is still too early to say whether Yanukovich’s Party of Regions will be able to build a working majority, and at what political cost. But the election looks unlikely to make it any easier for Yanukovich to tackle his country’s pressing economic problems.

In autumn 2010 the IMF forecast growth for this year of nearly 5 per cent. It cut that forecast to 3 per cent a few weeks ago. That’s a significant revision, bearing in mind that the Fund cut its forecast for Russia by 1 percentage point, while for the whole CIS region its forecast for this year has fallen by only half a percentage point over the past two years.

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In Europe and the US, they are often called “squeezed” or “worried”. In developing markets, they are “booming”, “growing” and, of course, “emerging”.

The middle classes are changing consumption habits around the world. Chart of the week takes a look at some key emerging markets and the level of middle class spending.

 

We have used data from the OECD and the Brookings Institution which define the middle class as those earning 10 to 100 dollars at purchasing power parity per day. On this basis, more than half of the globe’s middle class people are forecast to be in the Asia Pacific region in fewer then 10 years, compared to the current proportion of only one in four.

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Valentina Romei

The UK Department for Transport is under fire over the cancellation of a deal to award a rail franchise, because of “technical flaws” in the bidding process.

The incident brings the British railway system back into the headlines, where it has often been because of contested fare rises. Complaints about the railways may be something of a national sport, but according to a survey published last month by Eurobarometer, the European Commission body that analyses public opinion, people in the UK are more satisfied with their national and regional rail system than most of their European counterparts. Read more

Valentina Romei

The US has shown a turnround after data released by the Institute for Supply management showed an index rise in manufacturing after three months of consecutive contraction. However, there are doubts whether the positive trend will continue in the the near future for the US, whereas for India, Russia and Turkey, the expansion seems more robust.

In India, manufacturing output in September expanded at a faster rate than in August, with its order book rising and new export orders increasing for the first time since June. Rising demand has also helped Turkey, in addition to new business from abroad, after a fall in output in July and August. Read more

Valentina Romei

Ever feel you’ve read all there is to read about China’s growth as a world manufacturing power? Well, did you know that China now has almost complete control of the world’s umbrella market?

China exported over $2.4bn of umbrellas, walking-sticks and whips in 2010, over three quarters – and rising – of global export share.

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Valentina Romei

Tension between China and Japan over the East China Sea is threatening to disrupt the strong trade relationship between the two countries.

In July Japan exported a higher value of goods to China than to Europe or to north America. It also imported a higher value of goods from China than from north America and Europe combined, and about the same amount as from the rest of Asia combined. Read more

Valentina Romei

The employment rate in the UK rose to 71.5 per cent in the three months to July 2012, the highest since the end of 2009. Labour market conditions have been fairly positive in recent months despite the economic slow-down, portraying a much milder picture of the current economic crisis than GDP figures do.

The difference between the promising employment data and the bearish economic figures could be partially explained by the fact that the headline employment data  do not capture elements of the labour market such as inactivity rates and forms of non-full labour utilisation, including part-time workers that were not able to find a full-time job (‘involuntary part-time workers’).

According to OECD data, the UK has had a particularly fast upsurge of involuntary part-time workers, rising from 1.5 per cent of all employed people in 2004 – well below the average share for Europe or the OECD – to nearly 4 per cent last year, above both regions. The UK still has a lower proportion of involuntary part-time workers than peripheral European countries including Italy, and lower than Japan, but it is above most continental European countries including France and Germany and it is higher than that of the US.

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Valentina Romei

By Valentina Romei and Rob Minto

Another month of disappointing China trade data: on Monday, overall Chinese exports increased just 2.7 per cent in August from a year earlier, and imports dropped 2.6 per cent. Export growth was higher than July’s worrying 1 per cent, but it’s still far from the double-digit growth that was once the norm. Read more

Valentina Romei

Italian exports to non-EU countries reached over €17bn in August, almost 10 per cent more than the same month last year. The data released today by the Italian national office of statistics reveal a growth trend largely driven by the Asian markets, the US and Japan.

Export growth to non-European markets contrasts with a stagnating or contracting trend of Italian exports to Europe since the start of this year and an underperforming trend over the last decade.

But not all regions contributed in the same way to the export rise. In the first quarter of this year Tuscany, Sicily and Emilia Romagna were among the largest contributors. In Tuscany, the export growth to non-European markets grew at an annual rate of nearly 20 per cent, while the exports of the islands to the same markets were around 50 per cent bigger than the same period the previous year.

But as the chart below shows, this is not a new trend.

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Valentina Romei

For those who have had the chance to see them, the luxurious sun beds where fresh cocktails are promptly supplied to the indulging tourists in island resorts can seem like paradise. But the contrast with the poverty of local residents across many of these islands gives rise to the question of what impact tourism has on raising the level of national wealth?

So on a raining Wednesday in London, here is a look at the differing fortunes of some top holiday destinations:

The chart above shows how the GDP per capita in each island as a proportion of that of the US has changed since 1995 (unless otherwise specified) together with the change over the same time period in the number of tourists as a proportion of the population. Read more

Valentina Romei

The rise of emerging markets has been accompanied by rapid growth in their capital markets. But some markets have emerged more quickly than others. Chart of the week  looks at which markets have grown most quickly, and in which areas.

A recent study by CityUK of 150 emerging economies found that stock market capitalisation in emerging markets more than doubled in the last six years, as did the amount outstanding of domestic and international bonds. Bank assets increased threefold, and contracts traded on derivatives exchanges rose more than fivefold.

Growth was much faster than in the rest of the world, although EMs continue to represent a small part of the global total. They accounted for just 22 per cent of global market capitalisation in 2011, up from 9 per cent in 2005, and for 30 per cent of derivatives exchange trading, up from 12 per cent.

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Valentina Romei

Whilst the slowdown in China’s headline rate of growth has been extensively covered, what deserves more careful attention is its regional component.

This chart shows the economic growth rate in Q1 2012 of the various Chinese regions and their relative importance, sourced from China’s National Bureau of Statistics.

 

The growth of smaller regions was more volatile and was generally faster than for larger regional economies. Tianjin – a metropolis in northern China along the coast that boasts the highest GDP per capita in the country – had an impressive double digit growth, but its impact on the national number was fairly limited as it accounts for just above 2 percent of national production. Read more

Valentina Romei

With the focus on today’s UK GDP numbers showing the UK is technically back in recession after the economy shrunk 0.2 percent in the first quarter, it is worth remembering another important aspect of GDP – levels.

The most recent IMF World Economic Outlook shows clearly that three of the G7 economies Japan, the UK and – more drastically – Italy have never managed to go back to pre-crisis levels of GDP.

GDP growth rebased

GDP growth (rebased) Source: IMF

Why does this matter? Well it isn’t until pre-crisis levels of GDP are reached it can be meaningfully said economies have returned to some sort of normality (my colleague Keith Fray has written more about thisRead more