Chart for the day: Growing on Imports
by Rebecca Wilder
Chart for the day: Growing on Imports
Or should I say barely contracting on imports. In the traditional sense, growth in imports does not make a whole lot of sense. Normal economies import and export things, such that statistical agencies subtract the dollar amount of things that are made in other economies but consumed domestically (imports) out of their tally of spending on goods and services (GDP) in order to avoid double counting items. So if I spend $20 on candy at store in some resort town – $9 on taffy made in Monterey, California and $11 on chocolate made in Belgium – the government only counts the $9 candy made in Monterey as part of US GDP.
If imports is the sole positive growth contribution for GDP, that’s tantamount to production falling on goods and services but we don’t want to double-count the drop in spending of imported goods when calculating GDP, so it’s added back.
That’s what’s happening in the euro area. Fixed investment spending has dropped four consecutive quarters. Consumption grew in Q1 2013 but contributed just 0.04% to total growth following 5 consecutive quarters of contraction . Exports tumbled for two consecutive quarters, serving to drag growth -0.41% and -0.36%, respectively in Q4 2012 and Q1 2013. Over the last two quarters, imports has been the only consecutive positive contributor to GDP growth. Some heavy damage has been done in Europe by the austerity drive. Just thought you might want to see this.
Filed under: Euro area, GDP, Growth
.economonitor.com/rebeccawilder/2013/07/03/chart-for-the-day-growing-on-imports/#sthash.o78PJcfi.dpuf
Are there particular nations contributing to this such that they skew the numbers?
Europe is carrying no inventory it appears. It’s like the area has just decided that producing anything in house is passé.
Are we seeing the end results of financializing an economy. I mean, this is what I would expect if bankers rule.
If I am distinguishing well the blue bars, domestic consumption is declining for the past 2 years. Declining imports would be a consequence.
Daniel,
Would you define how you see financialization? Is it when the financial entities have their liquidity needs met first… at the expense of the liquidity of others?
Ed,
Ok, but I keep it simpler since posting here at AB 2007. I referred to it and still do as making money from money.
I have often referred to the Wikipedia page on it: Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades[when?], in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.
Are the majority of imports/exports intra-EU, – somewhere I’ve read that Germany in particular depended upon exports to China, and you can see where that line goes as China continues to slow [as iwas guaranteed by its long run over-accumulation]/
Long story very short -and not sure why- I’m reminded of Argentina’s trade patterns, leading into import subsitution-lite during ’00-’02 — but then this was also related to breaking the currency peg [though not so much as usually taken].
Take Care