Weekly Export Risk Outlook


Figure of the week:


US Q4 2012 GDP, Q/Q annualized basis

​US: Q4 2012 GDP contraction


Q4 2012 GDP was much worse than general expectations, contracting by -0.1% q/q sa annualised after +3.1% in Q3. The contraction resulted largely from a record -22% q/q fall in defence spending, reflecting the winding-down of operations in Afghanistan and also, perhaps, expectations of automatic budget cuts. However, even the best-performing sub-component of GDP, consumption, was weak at +2.2% q/q growth. Real disposable personal income accelerated markedly in December 2012, by +2.7% mo/mo, partly as a means of avoiding higher tax rates starting in January 2013. Similarly, the increase in payroll taxes resulted in consumer confidence falling sharply, by 8.1pps. Meanwhile, the January jobs report showed large upward revisions in data for 2012, but the three-month trend was down and weak, while the rate of unemployment increased to 7.9%. On a positive note, the latest Case-Shiller home price index showed an increase of +5.6% y/y—the tenth consecutive increase. Against this economic background, the Federal Reserve left key policy interest rates unchanged.


Eurozone: Composite PMI


The Composite Output Index for January 2013 improved by +1.4pps, to 48.6 (slightly above the preliminary data), but continued to indicate overall contraction in economic activity, although at a slower pace than in December 2012. The manufacturing component of the index increased by +1.8pps, while that for services improved by +0.8pps. A breakdown by country continues to point to diverging trends, with Germany recording a rise in activity (Composite PMI at 54.4 from 50.3 in December 2012, above the world PMI at 53.3), France and Italy on a downward trend (from 44.6 to 42.7 and from 45.7 to 45.4, respectively) and continuing contraction in Spain, although there was some improvement there (from 43.9 to 46.5).


Russia: GDP growth in 2012 weakened


Preliminary estimates indicate that real GDP growth slowed to +3.4% in 2012, from +4.3% in 2011. Data are not yet available for Q4, but the full-year figure for 2012 suggests that growth must have decelerated markedly in the final quarter unless the data for Q1-Q3—showing average growth of +3.9% y/y—were revised downwards. Private consumption remained strong in 2012, expanding by +6.6% (+6.4% in 2011), but public consumption was flat (+1.2% in 2011) and fixed investment growth declined to +6% (+10.2% in 2011). Moreover, inventories declined in 2012 after two years of increasing sharply. Net exports also weighed negatively on overall 2012 growth as export expansion remained weak at +1.8% (+0.3% in 2011) and was outpaced by imports, which increased by +8.7% (+20.3% in 2011). Expect GDP growth to remain weak in H1 2013 before picking up in H2, resulting in full-year growth of around +3.8%.


Argentina: Awkward IMF relations


At recent legal hearings in the US, the Argentine government has continued to argue that it should not pay USD1.33 billion to the debt “hold-outs”, as this would weaken its FX position (despite reserves of USD42.7 billion) although it could consider a reopening of the original debt swap. While reportedly some creditors could be open to such an option the focus remains on the Appeal Court ruling on payments scheduled for end-February. Meanwhile, the IMF has censured Argentina because of its continuing low quality inflation and GDP data, despite previous criticisms. End-September has been set as a deadline for remedial measures and the IMF Board will consider Argentina’s position again in mid-November, when it could take stronger action, including possible ineligibility (suspension of access and voting rights). Argentina repaid all its debt to the Fund in 2006.


Countries in focus:

  • Saudi Arabia: Politics
  • Ecuador: Presidential elections
  • Philippines: Strong 2012 GDP growth
  • Poland: GDP growth slowed markedly in 2012