1

Monthly Economic Report, Attica Bank.

Issue: 11/2019, November 2019

by

Ismini Patta, Economist Attica Bank

Highlights

Greece

Economic growth continues its positive path.

Investments’ performance is expected to improve.

Exports of goods kept on rising.

Industrial Production: slight decline.

Tourism continues to perform well in 2019.

Constructions: improvement.

Confidence: Slight contraction of the Economic Climate Index in October.

Employment: continuous improvement.

Eurozone

Euro area: spreading weakness.

The industrial sector remained in contraction

European exports, stalled in the first half of 2019

Euro-Area Current Account Balance : slight decrease

The unemployment rate is expected to decline.

Confidence: Economic Sentiment down in both the euro area and the EU.

International Economy

Global activity: further deceleration.

Global Trade: to the lowest levels after the crisis.

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Global financing conditions: easing.

Commodity markets: recovery from supply disruption.

Confidence declined.

United States of America

Growth is moderating.

Industrial production declined

Labor market: more jobs

China

Slowdown in China.

Industrial production growth accelerated a little.

Fixed asset investment continued to slow.

Imports declined.

Confidence fell.

Japan

Japan’s economy is projected to expand at a moderate pace.

Industrial production fell

Consumer confidence: decline.

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Economic Activity

Greece

Greece’s economic growth is expected to accelerate.

Economic growth continues its positive path.

GDP is expected to grow by 2.8% in 2020 year-over-year, at constant prices, and the

annual change for 2019 to stand at 2%, comparatively to the increase of 1% in 2018,

accordingly to the Ministry of Finance.

Investments’ performance is expected to improve.

For the period January to June 2019, Investment (including inventory change) recorded

an increase of 7.6% y-o-y change (in seasonally adjusted data ant at constant prices).

Gross Fixed Capital Formation is projected to increase year-over-year, by 13.4% in 2020

and 8.8% in 2019 comparatively to (-) 12.2% in 2018 (at constant prices).

Exports of goods kept on rising.

In August 2019, exports of goods excluding oil and ships increased by 3.9% month-over-

month at constant prices, while imports excluding oil and ships decreased by (-)3.8% .

For the period January to June 2019, Exports of Goods increased by 1.8% (y-o-y change,

seasonally adjusted, at constant prices) and Exports of Services by 8%, as well.

Respectively, Imports of Goods increased by 6.9% and Imports of Services by 4.5% (y-o-

y).

Industrial Production: slight decline.

General index on Industrial Production stood in August at 104,3 units versus 118,8 in

July. It changed by (-)0,6% comparatively a year before (y-o-y).

Manufacturing-Index stood in August at 99.7 points, versus 120,8 in July – and

signaling an annual change rate of 0,1% (y-o-y).

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Energy-Industrial Production- General Index stood in August at 119.5 units , versus

118,8 in July, declining by (-)0.8% from the previous year.

Tourism continues to perform well in 2019.

Tourism receipts were up by 13.6% in the period Jan - Jul 2019, mainly due to higher

average expenditure per trip (+13.1%), as arrivals increased only marginally (+ 0.6%). In

July specifically, Tourism receipts increased by 11.1% (y-o-y change seasonally adjusted,

constant prices).

Tourists arrivals in August amounted to 6,762 thousands persons (versus 5,673 thousands

in July), i.e an increase by 11% in August comparatively to +2.4% in July.

International arrivals in Athens Airport alone, amounted to 1632,4 thousands people, in

October versus 1878,6 in September and 2124,7 in August.

Constructions: improvement.

Accordingly to the Bank of Greece (BoG) and for the second quarter 2019 (2019Q2), the

General Production-Index-in-Construction (at constant prices) stood at 39,9 units versus

32,2 in previous quarter, but the annual change rate was of (-)5.8% (y-o-y).

Specifically, the Construction-Index-of-Buildings stood at 37,5 in October versus 33,5 in

2019Q1, signaling an annual change of (-)9,3% (y-o-y).

Civil- engineering-projects index stood at 42,7 in October versus 30,7 in 2019Q1,

signaling an annual change of (-)1,7%(y-o-y).

Construction Activity - in volume - stood at 521 (thousand ton.), in August 2019 - versus

538 in July- and signaling an annual change of (-)1,5% (y-o-y).

Confidence: Slight contraction of the Economic Sentiment Index in October.

The Greek Economic Sentiment Indicator and the Consumer Confidence declined in

October, as in the table below.

Greece EU-28 Eurozone

October 2019

September 2019

October 2019

September 2019

October 2019

September 2019

Economic Sentiment Indicator

106.7 107.2 99.0 100.0 100.8 101.7

Consumer Confidence Indicator

-8.4 -6.8 -7.3 -6.4 -7.6 -6.5

Source: Foundation for Economic & Industrial Research (IOΒE), (4 November 2019),

“Bulletin of Economic Trends, November 2019”.

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Industrial Confidence Indicator declined in October pointing to 105.3 units versus

106.8 in September. The Greek Construction-Confidence Indicator improved to 60.7 in

October from 50.8 units in September.

Services sector Confidence Indicator declined in October pointing to 101.4 units versus

105.2 in September. Especially for Hotels - Restaurants - Tourist Agencies, the

Indicator dropped in October to 100.3 (from 108.3), and is significantly lower than last

year (111.4) .

In October 2019, the average monthly yield of sovereign bonds declined further to

1.34% and at 0.62%, for the 10-year and 5-year bonds respectively, showing that

investors have grown more confident about the prospects of the Greek economy.

Employment: continuous improvement.

Available data of July 2019 and seasonally adjusted, point to a decrease of unemployment

at 16.9%, from 17.1% in the previous month and from 19.1% in July 2018. For the

period January to July 2019, Employment increased by 66,700 persons (change year-to-

date).

Table 1.2: Key indicators for the Greek economy

(% annual changes, constant prices)

2018 2019** 2020**

GDP 1. 9 2. 0 2. 8 Priv ate consumption 1. 1 0. 6 1. 8 Public consumption -2.5 1. 6 0. 6 Gross fixed capital formation -12.2 8. 8 13. 4 Ex ports of goods and serv ices 8. 7 4. 9 5. 1 Imports of goods and services 4. 2 4. 1 5. 2 GDP deflator 0. 6 0. 9 1. 0 Harmonized Index of Consumer Prices 0. 8 0. 6 0. 7 Employment* 1. 7 2. 0 1. 8 Unemployment rate* 17. 8 15. 9 14. 0 Unemployment rate (Labor Force Survey) 19. 3 17. 4 15. 6

Source: Annual National Accounts (Hellenic Statistical Authority), estimates/ projections of the Ministry of Finance, ), as in Greek Ministry of Finance, Draft Budget 2020, October 2019.

*On a national account basis ** Estimates/ projections

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GDP AND ECONOMIC CLIMATE PRIVATE CONSUMTION, RETAIL SALES,

(ELSTAT, Q2 2019, ΙΟΒΕ-DG ECFIN, Sep. 2019) CONSUMER CONFIDENCE (ELSTAT,Q2 2019,

ΙΟΒΕ-DG ECFIN, Sep. 2019)

Source: SEV, Monthly Bulletin No 49, October 2019.

INTERNATIONAL ARRIVALS AT MAIN AIRPORTS (SETE, Aug 2019).

Source: SEV, Monthly Bulletin No 49, October 2019.

Eurozone

Euro area: spreading weakness.

Accordingly to the IMF, GDP growth in Europe is projected to moderate from 2.3 %

(annual change) in 2018 to 1.4 % in 2019 (in all — the lowest growth rate since 2013—and

rebound to 1.8 % in 2020 and 1.9% in 2021).

Euro Area is projected to grow by 1.2% in 2019 and by 1.4% both in 2020 and 2021.

ECB Professional Forecasters (SPF) expectations for growth in Euro Area real GDP

growth averaged 1.1%, 1.0% and 1.3% for 2019, 2020 and 2021, respectively.

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Euro Area GDP Growth, percent change, y-o-y.

2019 2020 2021

ECB 1.1 1.0 1.3

IMF 1.2 1.4 1.4

Source: - ECB, 25 October 2019, ‘Q4 2019 ECB Survey of Professional Forecasters’.

- IMF, Regional Economic Outlook Europe, November 2019.

Eurostat preliminary estimate for the third quarter of 2019 (2019Q3), indicates GDP up by

0.2% in the Euro Area and by 0.3% in the EU28, comparatively to the previous quarter.

Growth rates of GDP in volume.

(based on seasonally adjusted data)

Percentage change compared with Percentage change compared with

the previous quarter the same quarter of the previous year

2018Q4 2019Q1 2019Q2 2019Q3 2018Q4 2019Q1 2019Q2 2019Q3

EA19 0.3 0.4 0.2 0.2 1.2 1.3 1.2 1.1

EU28 0.4 0.5 0.2 0.3 1.5 1.7 1.4 1.4

Source: Eurostat, (31 October 2019), news release 169/2019.

The industrial sector remained in contraction.

Industrial production fell in August, 2.8% (y/y).

European exports, stalled in the first half of 2019.

Euro-Area Exports of machinery and transport equipment contracted by 5.7% (y/y), in

August.

Euro-Area Current Account Balance : slight decrease.

Current Account (CA) is projected to reach 2.8% as annual percent change, versus 2.9%

annual change in 2018. For 2020, (CA) is projected to decline to 2.7% .

Current Account Balance is projected to stand at 376.6 billion US dollars.in 2019, at 368.9

billion$ in 2020, and at 344.1 billion$ in 2024.

The unemployment rate is expected to decline.

IMF projection for the annual percent change of the Euro Area unemployment stands at

7.7% in 2019 and 7.5% in 2020. The ECB projection for the Euro area unemployment

stands at 7.6% in 2019, 7.5% in 2020 and 7.4% in 2021, as annual percent change.

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On monthly basis and upon Eurostat, the euro area (EA19) seasonally-adjusted

unemployment rate was 7.5% in September 2019, stable compared with August 2019 and

down from 8.0% in September 2018. This is the lowest rate recorded in the euro area

since July 2008.

The EU28 unemployment rate was 6.3% in September 2019, stable compared with

August 2019 and down from 6.7% in September 2018.

Eurostat estimates that 15.635 million men and women in the EU28, of whom 12.335

million in the euro area, were unemployed in September 2019. Compared with August

2019, the number of persons unemployed increased by 48 000 in the EU28 and by 33 000

in the euro area. Compared with September 2018, unemployment fell by 889 000 in the

EU28 and by 738 000 in the euro area.

Euro Area Unemployment, annual percent change.

2019 2020 2021

ECB 7.6 7.5 7.4

IMF 7.7 7.5 ---

Source: - ECB, 25 October 2019, ‘Q4 2019 ECB Survey of Professional Forecasters’.

- IMF, World Economic Outlook, October 2019.

Confidence: Economic Sentiment down in both the euro area and the EU.

In October 2019, the Economic Sentiment Indicator (ESI) decreased in both the euro area

(by 0.9 points to 100.8) and the EU (by 0.9 points to 99.0).

In October 2019, the DG ECFIN flash estimate of the consumer confidence indicator

dropped in both the euro area (by 1.1 points) and the EU (by 0.9 points). It pointed at −7.6

points (euro area) and −7.3 points (EU).

GDP Growth, (year-over-year percent change)

October 2019 WEO

2018 2019 2020 2021 Europe 2.3 1.4 1.8 1.9

Advanced European Economies 2.0 1.3 1.5 1.6

Euro Area 1.9 1.2 1.4 1.4

Austria 2.7 1.6 1.7 1.5

Belgium 1.4 1.2 1.3 1.3

Cyprus 3.9 3.1 2.9 2.7

Estonia 4.8 3.2 2.9 2.8

Finland 1.7 1.2 1.5 1.5

France 1.7 1.2 1.3 1.3

Germany 1.5 0.5 1.2 1.4

Greece 1.9 2.0 2.2 1.7

Ireland 8.3 4.3 3.5 3.1

Italy 0.9 0.0 0.5 0.8

Latvia 4.8 2.8 2.8 2.9

Lithuania 3.5 3.4 2.7 2.5

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Luxembourg 2.6 2.6 2.8 2.7

Malta 6.8 5.1 4.3 3.7 Netherlands 2.6 1.8 1.6 1.5

Portugal 2.4 1.9 1.6 1.5

Slovak Republic 4.1 2.6 2.7 2.7

Slovenia 4.1 2.9 2.9 2.7

Spain 2.6 2.2 1.8 1.7

Memorandum

World 3.6 3.0 3.4 3.6

Advanced economies 2.3 1.7 1.7 1.6

European Union 2.2 1.5 1.6 1.7

United States 2.9 2.4 2.1 1.7

China 6.6 6.1 5.8 5.9

Japan 0.8 0.9 0.5 0.5

Sources: IMF, World Economic Outlook (WEO); and IMF staff calculations. IMF, Regional Economic Outlook Europe, November

2019.

European Union - Industrial Production

(Year-over-year percent change, 6-month moving average) 5

4

3

2

1 European Union

World

0

–1 Jan. 2016 Dec. 16 Nov. 17 Oct. 18 Aug. 19

Sources: IMF, Global Data Source; and IMF staff calculations.

IMF, Regional Economic Outlook, Europe, November 2019.

International Economy

Global activity: further deceleration.

Global GDP growth annual rate in 2020 is expected to increase by 2.3% (y/y) - the same as

in 2019 – versus 2.8% in 2018 (y/y).

Global Trade: to the lowest levels after the crisis.

World merchandise trade volume is forecast to grow 1.2% in 2019. It should accelerate

slightly by 2.7% in 2020 (y/y).

Global goods trade contracted again in August, at a rate of 1.2% (y/y).

Services export orders index fell to 48.8 points in September, contracting for the second

consecutive month .

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Global financing conditions: easing.

Since mid-September the US Federal Reserve purchases $60 billion worth of short-term

Treasury bills per month into at least the second quarter of 2020.

Commodity markets: recovery from supply disruption.

Energy prices rose slightly in September by 4.7% comparatively with the previous

month. In October, Brent crude oil prices remained below $60 per barrel.

Metals prices rose 1.7% in September.

Agricultural prices remained unchanged in September.

Confidence declined.

In September Global manufacturing Purchasing Manager’s Index (PMI) contracted for

the fifth consecutive month.

World merchandise exports and imports by level of development, 2012Q1-2019Q2

Volume index, 2012Q1=100

Source: WTO and UNCTAD.

WTO (1 October 2019), https://www.wto.org/english/news_e/pres19_e/pr840_e.htm .

World services trade activity index, 2015Q1 – 2019Q2

Index, 2015=100

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Source: WTO and UNCTAD, United States Federal Reserve, Bank for International Settlements and Secretariat

calculations.

WTO (1 October 2019), https://www.wto.org/english/news_e/pres19_e/pr840_e.htm

Global PMI new export orders index, Jan. 2010 – Aug. 2019

Note: Values greater than 50 indicate expansion while values less than 50 denote contraction.

Source: IHS Markit. WTO (1 October 2019), https://www.wto.org/english/news_e/pres19_e/pr840_e.htm

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Source: ABN-AMRO, (25 October 2019), https://insights.abnamro.nl/en/2019/10/macro-weekly-the-loss-of-

momentum-is-losing-momentum/?utm_source=nieuwsbrief&utm_medium=email&utm_term=25-10-2019&utm_content=Macro%20Weekly%20%E2%80%93%20The%20loss%20of%20momentum%20is%20losing%20momentum&utm_campaign=Nieuwsbrieven2019-wekelijksEN

Merchandise trade volume and real GDP, 2015-20201. Annual % change.

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1 Figures for 2019 and 2020 are projections.

2 Average of exports and imports.

3 Includes the Commonwealth of Independent States (CIS), including associate and former member States.

4 Refers to South and Central America and the Caribbean.

5 Other regions comprise Africa, Middle East and Commonwealth of Independent States (CIS).

Source: WTO and UNCTAD for trade, consensus estimates for GDP.

WTO (1 October 2019), https://www.wto.org/english/news_e/pres19_e/pr840_e.htm

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United States of America

Growth is moderating.

Real Gross Domestic Product GDP increased at an annual rate of 1.9 % , in the third

quarter (2019Q3) versus 2.0% in 2019Q2, accordingly to the advance estimate of the

Commerce Department's Bureau of Economic Analysis (BEA).

Source: BEA (30 October 2019), https://www.bea.gov/news/2019/gross-domestic-product-3rd-

quarter-2019-advance-estimate

The GDP level in 2019Q3 stood at 21,525.8 billion dollars and seasonally adjusted figures

(BEA).

Industrial production declined.

US industrial production fell by 0.4% month-over-month in September and by 0.1% year-

over-year. Manufacturing production fared slightly worse: (-)0.5% month-over-month and (-)

0.9% year-over-year.

Labor market: more jobs.

In the Labor market, in September, 136 thousand jobs were added in goods-producing

industries.

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Source: ABN-AMRO, 18 October 2019, https://insights.abnamro.nl/en/2019/10/macro-weekly-brexit-coming-to-the-crunch-while-global-manufacturing-remains-weak/?utm_source=nieuwsbrief&utm_medium=email&utm_term=18-10-2019&utm_content=Macro%20Weekly%20%E2%80%93%20Brexit%20coming%20to%20the%20crunch%20while%20global%20manufacturing%20remains%20weak&utm_campaign=Nieuwsbrieven2019-wekelijksEN

China

Slowdown in China.

GDP growth slowed to 6% in the third quarter (2019Q3) versus 6.2 % year-over-year in

the second quarter (2019Q2).

Growth is expected to decline moderately to 6.1 and 5.8 % in 2019 and 2020, respectively.

Industrial production growth accelerated a little.

Industrial production growth accelerated by a rate of 5.8% year-over-year in September,

up from 4.4% in August.

Fixed asset investment continued to slow.

Fixed asset investment continued to slow, falling by 5.4% year-over-year in September

Imports declined.

Chinese imports were down 8.5% year-over-year in September (in dollars and values).

Confidence fell.

In October 2019, China’s manufacturing purchasing managers index (PMI) was 49.3

percent. It fell by 0.5 % from the previous month.

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Source: ABN-AMRO, 18 October 2019, https://insights.abnamro.nl/en/2019/10/macro-weekly-brexit-coming-to-the-crunch-while-global-manufacturing-remains-weak/?utm_source=nieuwsbrief&utm_medium=email&utm_term=18-10-2019&utm_content=Macro%20Weekly%20%E2%80%93%20Brexit%20coming%20to%20the%20crunch%20while%20global%20manufacturing%20remains%20weak&utm_campaign=Nieuwsbrieven2019-wekelijksEN

Japan

Japan’s economy is projected to expand at a moderate pace.

Growth is projected to increase by 0.9 % in 2019 and by 0.5 % in 2020.

Industrial production fell.

Industrial production contracted in August, by a rate of 4.7% year-to-year.

Consumer confidence: decline.

Consumer confidence continued to decline in August, comparatively to previous months,

according to the World Bank.

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Source: ABN-AMRO (4 October 2019), ‘Macro Weekly – It takes courage to forecast a recession’,

https://insights.abnamro.nl/en/2019/10/macro-weekly-it-takes-courage-to-forecast-a-

recession/?utm_source=nieuwsbrief&utm_medium=email&utm_term=04-10-

2019&utm_content=Macro%20Weekly%20%E2%80%93%20It%20takes%20courage%20to%2

0forecast%20a%20recession&utm_campaign=Nieuwsbrieven2019-wekelijksEN

Ismini Patta has a PhD in International Political Economy, is a Research Associate in Panteion

University, and an Economist at Attica Bank. She has collaborated with several Institutes of

International Relations and Strategic studies. She has published several articles in the press and

the web pages, and has been a speaker in conferences. Focal points of her research are global

imbalances, G20, crises and the regulation of the financial sector, trade , development, defense

economics. Recent publicationς are “Global Imbalances And USA Military Expenses”, RIEAS

Institute, April 2011, Research Paper No 149; “The Cost of the G20 International Economic

Coordination (IEC) during the Recent Global crisis (2007/8); and “Debt Power Politics: The

impact of the Fiscal Expansion on the G20 Relative Power, over the period 2009-2011.” RIEAS,

December 2014, Research Paper No 166.

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