· 2019-07-23 · aug 24, 2018 re-introducing “counter-cyclical factors” jan 2018 stopping...

World Economic Trends II<The 2018 Autumn/Winter Report>

- 'Sophistication of China`s Exports and U.S.-China Trade Tension -

March 2019Cabinet Office

Government of Japan

(Summary)

Contents

■Chapter 1 U.S.-China trade tension and China’s higher value-added economy…P2

Section 1: Background of U.S.-China trade tension

Section 2: Effects of U.S.-China trade tension

Section 3: China’s higher value added exports

■Chapter 2 Economic Trends in Major Regions…P9

Section 1: World Economy

Section 2: U.S. Economy

Section 3: Asian Economy

Section 4: European Economy

1

About “World Economic Trends”This report, published semi-annually since 2002, surveys and analyses the trend of the world economy. This is the 34th issue.

ChinaU.S.

GermanyTaiwan Japan

Korea

0

1

2

3

4

5

0 18,000 36,000 54,000 72,000 90,000 108,000(GDP per capita in dollar terms)

(Ratio of R&D spending to GDP, %)

(Notes) 1. Adapted from “World Economic Outlook Database October 2018” by IMF and from OECD Stat.

2. Based on figures of OECD member countries, China, Taiwan, Singapore, Russia, Argentina, Romania, and South Africa.

3. Ratio of R&D spending to GDP is based on figures of Singapore in 2014, those of New Zealand, Republic of South Africa, and Swiss in 2015, those of China in 1995 to 2016, and those of other countries and regions in 2016.

■Chapter 1 U.S.-China trade tension and China’s higher value-added economy (i)

2

1. Quantitative expansion of Chinese economy(1) Share of major countries and regions in global GDP (2) Share of countries and regions in U.S. imports

2. Efforts to improve the quality of Chinese economy(3) R&D spending in major countries and regions (4) Relationship between R&D spending and GDP per

capita in major countries and regionsChina’s R&D spending continues to increase, approaching that of U.S.

China’s share expanded sharply after joining WTO. At present, the U.S. and China account for about 40% of global GDP.

China has expanded its share to the same level of Japan in the middle of the 1980s.

U.S.$10.6 trillion

31%

China$1.3 trillion

4%

Japan$4.3 trillion

13%

EU$9.0 trillion

27%

Emerging(excluding China)

$5.7 trillion17%

Others$2.6 trillion

8% U.S.$19.5 trillion

24%

China$12.0 trillion

15%Japan

$4.9 trillion6%

EU$17.3 trillion

22%

Emerging (excluding China)

$19.7 trillion25%

Others$6.6 trillion

8%

Global GDP was $34 trillionin 2001 (year when China joined WTO)

Global GDP was $80 trillionin 2017

(Note) Adapted from “World Economic Outlook, October 2018” by IMF.

0

5

10

15

20

25

1980 85 90 95 2000 05 10 15 17

(%)

(Year)(Note) Adapted from U.S. Department of Commerce.

ChinaEU

Japan

Japan’s highest share22.4% in 1986

About 40%

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

1995 97 99 01 03 05 07 09 11 13 15 16

U.S.

Japan

EU

China

($100 million)

(Note) Adapted from OECD Stat.

(Year)

Germany

China expands R&D spending faster than growth in GDP per capita.

(Note) Adapted from U.S. Department of Commerce, National Bureau of Statistics of China, and General Administration of Customs of the People's Republic of China.

Imports of $2.3 trillion(Ratio to GDP, 12.0%)

U.S. GDP of $19.5 trillion

Imports from China (diagonal line part)

$505.5 billion((Ratio to GDP, 2.6%)

Imports of $1.8 trillion((Ratio to GDP, 15.3%)

China’s GDP of $12.0 trillion

Imports from U.S. (diagonal line part)

$155.2 billion(Ratio to GDP, 1.3%)

■ Chapter 1 U.S.-China trade tension and China’s higher value-added economy (ii)

3

3. Background of U.S.-China trade tension (1) Additional tariff measures by U.S. and China (2) Status of US-China trade talks

4. Scale of economy brought by U.S.-China trade tension (3) Share of the U.S. and China’s exports in respective GDP

Effects of exports are relatively great in China. Effects of imports are relatively great in U.S.

(4) Share of the U.S. and China’s imports in respective GDP

U.S. GDP of $19.5 trillion

Exports of $2.3 trillion(Ratio to GDP, 18.8%)

China’s GDP of $12.0 trillion

Exports to U.S. (diagonal line part)


Exports of $1.5 trillion(Ratio to GDP, 7.9%)

Exports to China (diagonal line part)


(Note) Adapted from U.S. Department of Commerce, National Bureau of Statistics of China, and General Administration of Customs of the People's Republic of China.

Date for imposing additional tariffs

(final list release date)

What to do (against China)

Example of items subject to tariffs

Date for imposing additional tariffs

(final list release date)

What to do (against U.S.)

Example of items subject to tariffs

Jul 6, 2018(Jun 15, 2018)

Additional 25% tariffs on $34 billion worth of goods

Industrial machinesElectronic parts

Jul 6, 2018(Jun 16, 2018)


Agricultural products like soybeans, cars, fishery

products

Aug 23, 2018(Aug 7, 2018)


Plastic productsIntegrated circuits

Aug 23, 2018(Aug 8, 2018)


Chemical products, medical facilities, energy

products, cars

Sep 24, 2018(Sep 18, 2018)

Additional 10% tariffs on $200 billion worth of goods (*)

Food productsFurniture

Sept 24, 2018(Aug 3, 2018)

Additional 5-10% tariffs on $60 billion worth of goods

Liquefied natural gas, food products & beverages,

electrical products

The date is undecided Additional 25% tariffs on $257 billion worth of goods (**) -

Dec 1, 2018 US-China Summit

Jan 2019 Ministerial and vice-ministerial level meeting was held

Feb 2019 Ministerial and vice-ministerial level meeting was held

((Notes) 1.* The tariffs were to be raised to 25% at Jan 1, 2019 as of Sept 24, 2018. As a result of the US-China Summit held on Dec 1, 2018, the tariff hike was postponed to Mar 1,2019, and further postponed based on the progress of trade talks (the deadline was not published as of Mar 1, 2019).

2.** In Sep 18, 2018 President Trump announced that the U.S. would impose additional 25% tariffs on $257 billion worth of goods if China should invoke countermeasures.

(U.S.) (China)• Regarding the additional tariff measures

worth $200 billion (as the 3rd round of a series of measures), the U.S. decided to leave tariffs unchanged at 10% after Jan 1, 2019

• Both governments agreed to make effort to conclude negotiations within 90 days

• If they don’t reach an agreement, the U.S. will raise the 3rd round of tariffs to 25%

46

48

50

52

54

56

58

1

2010 11 12 13 14 15 16 17 18 19(Note) Adapted from Markit.

(Month)(Year)

(D.I.)

Developed

EmergingGlobal

5.86.06.26.46.66.87.07.27.4

2015 16 17 18 19

Yuan appreciation

Yuan depreciation

(yuan/US dollar, inverse scale)

(Month)

(Year)

Oct 15, 2015 Requiring financial institutions handling foreign currency forward contracts (involving foreign currency-buying and yuan-selling) to deposit a reserve (foreign exchange risk reserve)

Sept 11, 2017 Stopping requiring financial institutions

to deposit a reserve Aug 6, 2018Re-requiring financial

institutions to deposit a reserve

Aug 24, 2018Re-introducing “counter-

cyclical factors”

Jan 2018Stopping “counter-

cyclical factors”

Aug 11-13, 2015Lowering RMB central parity rate

May 2017Introducing “counter-

cyclical factors”

■Chapter 1 U.S.-China trade tension and China’s higher value-added economy (iii)

4

5. Effects on Chinese financial and capital markets(1) Renminbi exchange rate (2) Foreign reserves

6. Effects on global corporate sentiment(3) Global manufacturing business confidence (4) Global manufacturing new export orders

Declining trend in both developed and emerging markets since the beginning of 2018.

Sharp drop due to intensifying U.S.-China trade tension. Lower than the breakpoint of 50 in both developed and emerging markets

The renminbi depreciatedsignificantly around mid 2018, mainly due to implementation of additional tariff measures by U.S. and China.

46

48

50

52

54

56

58

1

2010 11 12 13 14 15 16 17 18 19(Note) Adapted from Markit.

(Month)(Year)

(D.I.)

Developed

Emerging Global

2.52.72.93.13.33.53.73.9

1

2015 16 17 18 19

(Month)(Year)

($1 trillion)

(Note) Adapted from the People’s Bank of China.

Foreign reserves decreased significantly when the stock prices fell in 2015, but remain stable in the current phase.

(Notes) 1. Adapted from Bloomberg.2. “Counter-cyclical factors” are an additional item for the method of calculating central

parity rates. The factors are said to prevent currency rates from fluctuating too much by separating from fundamentals.

(4) China’s imports by destination

-40

-30

-20

-10

0

10

20

Q3 7 8 9 10 11

2015 16 17 18

(YoY, %)

(Notes) 1. Adapted from U.S. Department of Commerce.2. On a customs basis, nominally/not seasonally adjusted.

(Quarter/month)

(Year)

Aircraft

Mineralfuels

Optical devices.

Cars

Soybeans

Others

Exports of goods, YoY(polygonal line)

(monthly)

-20-15-10

-505

1015202530

Q4 7 8 9 10 11 12 1

2015 16 17 18 18 19

アメリカ

EU

日本

香港・韓国・台湾・ASEAN

その他

(YoY, %)

(Monthly)

■Chapter 1 U.S.-China trade tension and China’s higher value-added economy (iv)

5

7. More burden on American producers and consumers(1) U.S. Exports to China (by product) (2) Amount of increase in U.S. tariff revenue

(3) China’s exports by destination

Significant effects of additional tariff measures against imports from China on the increase in tariff revenue.

0

10

20

30

40

3 4 5 6 7 8 9 10 11

2018

($100 million)

(Month)

(Year)

Amount of increase in tariff revenue due to additional tariffs on imports from China

Amount of increase in tariff revenue due to additional tariffs on steel and aluminum

(Reference)YoY comparison in total

tariff revenue

(Notes) 1. Adapted from U.S. Department of Treasury, and Department of Commerce.2. Amount of increase in tariff revenue due to additional tariff measures is estimated by Cabinet Office

based on statistic item numbers designated and published as items subject to additional tariff measures.

-20-15-10

-505

1015202530

Q4 7 8 9 10 11 12 1

2015 16 17 18 18 19

アメリカ

EU

日本

系列5

その他

(Quarter/month)

(Year)

(YoY, %) (Monthly)

Hong Kong/Korea/Taiwan/ASEAN

(Quarter/month)

(Year)

Mainly soybeans and cars on which China has imposed additional tariff measures have significantly reduced export growth.

8. Effects of U.S.-China trade tension on China’s exports and imports

Decline in overall import growth, mainly in imports from U.S. since Nov 2018.

（備考）中国海関総署より作成。（備考）中国海関総署より作成。

(Note) Adapted from General Administration of Customs of the People's Republic of China.(Note) Adapted from General Administration of Customs of the People's Republic of China.

U.S. Decline in overall export growth, mainly in exports to U.S. since Nov 2018.

Others

Japan

Others

EUU.S.

EU

JapanHong Kong/Korea/Taiwan/ASEAN

■Chapter 1 U.S.-China trade tension and China’s higher value-added economy (v)

6

9. Structural changes in China’s exports and imports(1) China’s exports by production stage (2) China’s imports by production stage

10. China’s higher value added exports (i)(3) Trends in global gross exports and value added exports (4) Share of value added exports in gross exports Global value chain (GVC) development lost momentum after the global financial crisis.

In China, the share of domestic value added in exports rose (dependency on overseas imports in producing exports declined) after the global financial crisis.

The share of consumption goods decreased, while the shares of intermediate goods and capital goods increased.

The shares of consumption goods and raw materials increasedwhile the shares of intermediate goods and capital goods decreased.

0

10

20

30

40

50

2000 05 10 15 16

(Note) Adapted from “RIETI-TID 2016” by Research Institute of Economy, Trade and Industry.(Year)

(Share, %)

Raw materials

Intermediate goodsConsumption goods

Capital goods

20

25

30

35

40

45

50

0

50,000

100,000

150,000

200,000

250,000

1990 95 2000 05 10 15 1718

総輸出

付加価値輸出

差（％、目盛右）

($100 million)

(Notes) 1. Adapted from UNCTAD-Eora GVC Database. 2. Figures after 2016 are estimated by the nowcast models created by UNCTAD.3. Difference (%) is a ratio of the difference between the amount of value-added

exports and the amount of Gross exports to the amount of value added exports.

(%)

(Year)

60

65

70

75

80

85

90

95

100

1990 95 2000 05 10 15 1718

日本中国アメリカドイツ

(%)

(Notes) 1. Adapted from UNCTAD-Eora GVC Database. 2. Figures after 2016 are estimated by the nowcast models created by UNCTAD.

(Year)

0

10

20

30

40

50

60

70

2000 05 10 15 16 (Year)

(Share, %)

(Note) Adapted from “RIETI-TID 2016” by Research Institute of Economy, Trade and Industry.

Raw materials

Capital goods

Intermediate goods

Consumption goods

Gross exportsJapan China U.S. Germany

Difference (%, right scale)

Value-added exports

■Chapter 1 U.S.-China trade tension and China’s higher value added economy (vi)

7

11. China’s higher value added exports (ii)(1) Share of domestic value added in U.S. and China’s exports (2) Income elasticity of U.S. and China’s exports

12. China’s higher value added exports (iii)(3) GVC participation rate of U.S.

Mostly “forward participation” in the past, but gradual increase in “backward participation”has been observed..

Along with the increasing share of domestic value added in exports, “forward participation” has been expanding.

(4) GVC participation rate of China

0

10

20

30

40

50

60

70

1995 2000 05 10 18

後方への参加前方への参加

(%)

(Notes) 1. Adapted from UNCTAD-Eora GVC Database.2. Figures for 2018 are estimated by the nowcast models created

by UNCTAD.

(Year)0

10

20

30

40

50

60

70

1995 2000 05 10 18

後方への参加

前方への参加

(%)

(Notes) 1. Adapted from UNCTAD-Eora GVC Database.2. Figures for 2018 are estimated by the nowcast models created

by UNCTAD.

(Year)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

(Year)

Income elasticity (China)

Income elasticity (U.S.)

Income elasticity of China’s exports is on an upward trend reflecting its higher value-added exports.China’s export structure is more subject to sluggish external demand than that of U.S.

Shares of domestic value added in automobile and semi-conductor exports from U.S. are on a downward trend.Share of domestic value added in computer exports from China is on an upward trend.

(Image of GVC participation rate)

(Downstream)

(Upstream)

Country B’s backward

participation rate

Country A’s exports: aCountry A’s value added exports: a

:

Country B’s exports: a + bCountry B’s value added exports: b

Country B’s forward

participation rate

:

Country C’s exports: a + b + + cCountry C’s value added exports: c

30

40

50

60

70

80

90

100

2000 05 10 15 (Year)

Wearing apparel

Electronic computer

(Note) Adapted from UNCTAD-Eora GVC Database.

(%)

70

75

80

85

90

95

2000 05 10 15(Year)


(%)Semi-conductors,

etc.Automobile

Backward participation

Forward participation

Forward participation

Backward participation

(U.S.) (China)

(Note) Adapted from World Bank, BIS, and National Bureau of Statistics of China.

■ Chapter 1 U.S.-China trade tension and China’s higher value-added economy (vii)

8

13. Effects through supply chains (i)

(3) Ratio of value added in semi-conductors, etc. exported from U.S. by country

4. Effects through supply chains (ii)

(1) Foreign value added in U.S. exports: share by country and region

Increasing dependency on imports from China. Decreasing dependency on imports from developed countries.Strengthening GVC ties with ASEAN.

China’s share of value added in U.S. export ofsemi-conductors, etc. is on an upward trend.

(2) Foreign value added in China’s exports: share by country and region

0.0

0.5

1.0

1.5

2.0

2.5

2000年 05年 10年 15年

China

Japan

Germany


(%)

0

2

4

6

8

10

12

14

16

18

2000年 05年 10年 15年

U.S.

Germany

Japan


(%)

(4) Ratio of value added in computers exported from China by countryU.S. share of the value added in China’s computer exports ison a downward trend.

0

20

40

60

80

100

1995 2000 05 10 15 18

日本 EU28 カナダメキシコ中国

韓国台湾インド ASEAN その他(%)

(Notes) 1. Adapted from UNCTAD-Eora GVC Database.2. Figures for 2018 are estimated by the nowcast

models created by UNCTAD.

(Year)

EU & Japan

Canada & Mexico (NAFTA)

Major Asian countries & regions

Others

0

20

40

60

80

100

1995 2000 05 10 15 18

アメリカ日本 EU28 韓国

台湾インド ASEAN その他(%)

(Year)(Notes) 1. Adapted from UNCTAD-Eora GVC Database.

2. Figures for 2018 are estimated by the nowcast models created by UNCTAD.

U.S. & EU & Japan

Major Asian countries & regions

Others

Japan EU28 Canada Mexico ChinaU.S. Japan EU28 Korea

Korea Taiwan India ASEAN Others Taiwan India ASEAN Others

2000 05 10 15 1510052000

404550556065707580

2018 19(Notes) 1. Adapted from Bloomberg.

2. Crude oil prices are WTI futures prices.

(Dollar/barrel)

(Month)

(Year)

Jul 1, OPEC members and non-member stateseased coordinated production cut (agreed upon on Jun 23)

Aug 7, the U.S. re-imposed some of the economic sanctions on Iran

Nov 5, the U.S. re-imposed full-scale economic sanctions on Iran

Jan 1, OPEC members and non-member states expanded coordinated production cut (agreed upon on Dec 7)

-2

-1

0

1

2

3

4

5

6

2000 05 10 15 18 (Year)

(%)

U.S.

China

Developed(excluding U.S.)

Emerging & developing(excluding China)

■Chapter 2 Economic Trends in Major Regions (World economy)

9

The world economy has been recovering moderately on the whole. With increasing uncertainty on economic policies, the growth pace in 2019 is expected to be a little slower than that in 2018. Crude oil prices have been on an upward trend in 2019 mainly due to coordinated production cut after a significant drop in 2018.

1. Characteristics in current economic conditions(1) Global real economic growth rate

2. Outlook for world economic growth and crude oil prices(4) Crude oil prices

(2) Global industrial production and Economic Policy Uncertainty Index

Growth in industrial production peaked out in the beginning of 2019.Economic Policy Uncertainty Index hit a record high level.

0

50

100

150

200

250

300

350

-15

-10

-5

0

5

10

15

(Year)

(YoY, %)

(Notes) 1. Adapted from Economic Policy Uncertainty created by World Bank.2. Long-term averages of real goods export and industrial production are

average values between January 1997 and November 2011, and between January 1997 and December 2018, respectively.

Industrial production(Index)

Economic Policy Uncertainty Index

(right scale)

Industrialproduction (Long-

term average)

(Notes) 1. Adapted from “World Economic Outlook 1, October 2018” by IMF.2. 39 developed countries and 155 emerging & developing countries are classified according to

IMF classification. 3. Contribution of each country and region is estimated based on its weight in the previous year’s

nominal GDP.

3.72.9

6.6

1.80.9

3.5

2.5

6.2

1.61.1

3.6

1.8

6.2

1.7

0.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

世界アメリカ中国ユーロ圏日本

2020

(%)

2019

(Note) Adapted from “World Economic Outlook update, January 2019” by IMF.Figures for 2018, 2019, and 2020 are all predicted.

2018

The world economic growth rate in 2019 is expected to fall slightly compared with 2018.

JapanEurozoneChinaU.S.World

The economy recovered more moderately in 2018 than in 2017.

(3) Outlook for world economic growthSignificant drop in autumn 2018.Upward trend in 2019 mainly dueto coordinated production cut.

■Chapter 2 Economic Trends in Major Regions (U.S. economy)

10

The U.S. economy has been continuing its long-term economic recovery for more than nine and half years since the global financial crisis, with the employment situation improving continuously. FRB raised interest rates four times in 2018. The effect of the partial government shutdown on the economy will be limited in full-year 2019.

1. Current state of U.S. economy(1) Real economic growth rate

2. Movements in U.S. policy(4) Effect of the partial government shutdown on real

economic growth rate

(2) Labor market

(3) Policy interest rates

-4

-2

0

2

4

6

Q3

2015 16 17 18

(QoQ annualized rate, %)Real economic growth rate

(Quarter)(Year)

Net export

Inventory investment

Business fixed investment

Private consumption

Government expenditure

(Note) Adapted from U.S. Department of Commerce.

Housing investment

1.01.52.02.53.03.5

Q4 Q1 Q2 Q3 Q4

2018 19

Outlook on growth rate without considering the effect of the partial government shutdown(Baseline prediction)

(Quarter)

(Year)

(QoQ annualized rate, %)

Outlook on growth rate in consideration of the effect of the partial government shutdown

The effect of the partial government shutdown on real GDP in full-year 2019 will be minus 0.02%.

0

1

2

3

4

5

6

2004 05 06 07 08 09 10 11 12 13 14 15 16 17 1819(Notes) 1. Adapted from FRB.

2. Policy Interest rate is FF (Federal Funds) target rate.FF rate has been incremented or decremented by 0.25% points since Dec 2008.

3. In January, FOMC also made another statement that it would review its balance sheet normalization program.

(Month)(Year)

(%)

From Dec 20, 2018 onwardsFF target rate

(upper limit of 2.50%)

34567891011

-90

-60

-30

0

30

60

(Year)

Unemployment rate (right scale)4.0% in Jan 2019

MoM change in employment304 thousand people in Jan 2019

(MoM, in 10 thousand people)

(Notes) 1. Adapted from U.S. Department of Labor.2. Nonfarm employment.

(%)

Increase in employment and downward trend in unemployment.Robust private

consumption and business fixed investment supported high growth.

The FOMC said in its January statement that it would be patient in adjusting interest rates in the future.

(Notes) 1. Adapted from “The Budget and Economic Outlook: 2019 to 2029 (Jan 28, 2018)” and “The Effects of the Partial Shutdown Ending in January 2019 (Jan 28, 2019) created by the Congressional Budget Office (CBO).

2. The period of the partial government shutdown was 35 days from Dec 22, 2018 to Jan 25, 2019.3. The effect of the partial government shutdown includes delay in expenditure for the purchase of

goods and service by the federal government, but does not include indirect effects due to failure of businesses to obtain authorization from the federal government, for instance.

0

5

10

15

2015 16 17 18

(YoY, %)

(Month)(Year)

Nominal

Real

(Notes) 1. Adapted from National Bureau of Statistics of China.2. Real growth rates in Mar 2017, Jan-Feb 2018, and Dec 2018 are not published.

-30

-20

-10

0

10

20

30

40

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1

2015 16 17 18 19

(YoY, %)

Taiwan

Korea

(Month)

(Year)

Thailand

(Note) Adapted from National Bureau of Statistics of China.

0

5

10

15

20

25

30

12

2015 16 17 18

(YTDoYTD cumulative total, %)

(Month)(Year)

Overall fixed asset investment

Manufacturing investment

Real estate development investment

Infrastructure-related investment

(2) Fixed asset investment

■Chapter 2 Economic Trends in Major Regions (Asian economy)

11

The Chinese economy has slowed down moderately. This is because growth in infrastructure investment has fallen due to effectscaused by efforts to reduce debt, and growth in consumption has somewhat fallen since autumn in 2018. Against the background of the slowdown of the Chinese economy, growth in exports to China has fallen in Asian countries.

(1) China’s real economic growth rate

(3) Consumption (4) Exports to China from Korea, Taiwan, and Thailand

1. Slowdown of Chinese economy

2. Slowdown of Chinese economy and its spillover effects

Growth rate in 2018 fell gradually.

Growth in consumption has been on a downward trend. Slowdown of Chinese

economy had spillover effects on Asian countries.

Growth in infrastructure-relatedinvestment, which had fallensignificantly in early 2018, beganto bottom out around the autumn.

-2

0

2

4

6

8

10

201516 17 18 Q42015 16 17 18

(Quarterly series)

(Quarter)(Year)

(YoY, %)

(Year)

Capital formation

Final consumption

Net export

Real economic growth rate

(Note) Adapted from National Bureau of Statistics of China.

(Notes) 1. Adapted from Korea Customs Service, Ministry of Finance, R.O.C.(Taiwan)and Ministry of Commerce, Thailand.

2. U.S. doller-based, 3-month moving averages, including exports to Hong Kong.

(3) Manufacturing production in Germany

-4-3-2-101234

2017 18

(Month)

(Year)(Notes) 1. Adapted from Federal Statistical Office.

2. WLTP (Worldwide harmonized Light vehicles Test Procedure) is a globally harmonised test procedure for measuring CO2 emissions and fuel consumption from cars and vans in conditions close to actual running.

3. The share of road transport vehicles, etc. in manufacturing industry is 17.7% (2015).4. 3-Month moving averages.

(MoM, %) Manufacture of motor vehicles, trailers and semi-trailers

Manufacturing production

WLTP applied to all new car registration.

-12-10

-8-6-4-202468

10

Q42015 16 17 18

Business sector


Public sector

Private dwellings

Gross fixed capital formation

Others

(Quarter)

(Year)(Note) Adapted from Office for National Statistics.

-1

0

1

2

3

4

5

Q42015 16 17 18

Eurozone0.8% in Oct-Dec*

Germany0.1% in Oct-Dec*

UK0.7% in Oct-Dec*


(Quarter)

(Year)

2

4

6

8

10

12

14

2008 09 10 11 12 13 14 15 16 17 18

Germany3.3% in Dec

(%)

France9.1% in Dec

UK4.0% in Dec

Italy10.3% in Dec

Eurozone7.9% in Dec

(Month)

(Year)(Note) Adapted from Eurostat.

■ Chapter 2 Economic Trends in Major Regions (European economy (i))

12

The Eurozone economic growth rate fell as the economy of Germany had remained at a standstill since the latter half of 2018, dueto temporary factors including a slowdown in the pace of expansion in external demand and the introduction of WLTP. Uncertaintyover Brexit weighed down capital investment, resulting in weaker recovery.

(1) Real economic growth rates in major European countries (2) Unemployment rates in major European countries

(4) UK Business fixed investment

1. Trends in European economy

2. Weaknesses in German and UK economiesBusiness investment has been declining for 4 consecutive quarters due to uncertainty related to Brexit.

The Eurozone economy has recovered moderately, with weaknesses seen in some countries like Germany. The UK economic recovery has been weak.

The rate has been generally on a downward trend since 2013.

Signs of improvement have appeared recently despite a drop in production mainly of road transport vehicles in 2H of 2018.

(Note) Adapted from Eurostat, the Federal Statistical Office and Office for National Statistics.

-6

-4

-2

0

2

4

Q4

200708 09 10 11 12 13 14 15 16 17 18

純輸出

在庫・誤差脱漏

総固定資本形成

政府消費

個人消費

実質経済成長率

(YoY, %)

(Note) Adapted from Italian National Institute of Statistics.

(Quarter)

(Year)

(Quarter)(QoQ annualized rate, %)

15

17

19

21

23

25

65

66

67

68

69

70

1992 95 98 01 04 07 10 13 1617

生産年齢人口の総人口に占める割合

移民就業者の全就業者に占める割合

（目盛右）

(%)

(Year)

(%)

16.1

21.1

0.75

0.80

0.85

0.901.0

1.5

2.0

2.5

3.0

3.5

2

2018 19

(%)

(Month)

(Year)

Dollar/euro rate(right scale)

Yield spread between Italian and German government bonds

Euro appreciation

Euro depreciation

(Dollar/euro, inverse scale)

(Notes) 1. Adapted from Bloomberg.2. Yield spread between Italian and German government bonds is calculated by subtracting

the German 10-year bund yield from the Italian 10-year bond yield.

Sep 27Ministers agreed on the Economic

and Financial Document

Jun 6New administration in Italy

Mar 4Italian general

election

Nov 21European

Commission gave an opinion to

Italy’s budget plan

Dec 19EU and Italy

made an agreement

■ Chapter 2 Economic Trends in Major Regions (European economy (ii))

13

In Germany and UK, the number of immigrants has been increasing with the tight labor supply-and-demand situation continuing.Increased political and policy uncertainty in Italy, including an ongoing conflict with EU over Italy’s expansionary budget plan, hascaused the financing environment to deteriorate, showing Italy has entered into a recession.

(1) Working age population and immigrants in Germany (2) Net immigration to UK

(3) Italy’s real economic growth rate (4) Italy’s fiscal risk premium

3. Utilization of immigrants in Germany and UK

4. Weaknesses in Italy

Immigrant workers have partially offset the decrease in labor force population.

Minus growth for two consecutive quarters.

UK’s referendum on Brexit held in June 2016 has reduced the number of immigrants from EU.

The risk premium has been widened since June 2018 due to concerns over fiscal management.

0

10

20

30

40

6 6

2010 11 12 13 14 15 16 17 18

(10,000 people)

EU(Month)

(Year)

Non-EU

Overall

(Notes) 1. Adapted from Office for National Statistics.2. Figures for 2018 are provisional.3. Number of net increases in the past year until the time of publication (by quarter).4. Immigrants are those who are defined by UN (as those who move to countries other

than that of their usual residence for a period of at least 12 months).

(Notes) 1. Adapted from World Bank, Federal Statistical Office.2. The working age population is defined as those aged 15 to 64.3. 1% point on the left longitudinal axis shows about 827 thousand people, while 2%

points on the right longitudinal axis show about 883 thousand people.4. Immigrants are defined as those who have moved to live in the territory of the current

Federal Republic of Germany since 1949 (See text for details).

Share of working age population in the total population

Share of immigrant workers in total employment (right scale)

Net export

Household consumption

Chang in inventories, acquisitions less disposals of valueables

Gross fixed capital formation

Government consumption

Real economic growth rate

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