Real GDP growth was confirmed at 0.1% in Q3 2013
EZ real GDP grew 0.1% QoQ in Q3 2013, unchanged from the first estimates released last month. This was lower than 0.3% QoQ achieved in the second quarter of 2013. Accordingly, EZ real GDP was 2.8% lower than its all-time peak reached in the first quarter of 2008. In YoY terms, real GDP declined 0.3% in Q3 2013, marking its seventh consecutive decline.
Excluding inventories, real GDP contracted in Q3 2013
Total investments (or Gross Capital Formation, GCF) grew 2.0% QoQ last quarter, marking its first growth in the past nine quarters. However, it is important to note that majority of that growth came through inventories, as fixed investments (or Gross Fixed Capital Formation, GFCF) growth was only slightly higher at 0.4% QoQ in Q3 2013, as against 0.2% in Q2. In other words, inventories added 27 bps to GDP growth in Q3 2013, as against a deduction of 14 bps in the previous quarter. Thus, excluding inventories, EZ real GDP contracted 0.2% QoQ in Q3 2013, as against a growth of 0.4% in Q2 2013.
Private consumption growth also decelerated.
Besides investments, private consumption expenditure (PCE) grew 0.1% QoQ in Q3 2013, slower than 0.2% in the previous quarter. Consequently, PCE contributed only 4 bps to GDP growth, less than half the contribution of 9 bps in Q2 2013.
.and net exports acted as a drag in Q3
Following a sharp growth of 2.1% QoQ in Q2 2013, real exports increased 0.2% in Q3 2013 due to which its contribution to GDP growth also reduced sharply from 97 bps to 8 bps last quarter. On the other hand, while imports also grew at slower pace, they deducted 41 bps from GDP growth in Q3 2013. Consequently, net exports subtracted 33 bps from GDP growth in Q3 2013, as against an addition of 33 bps in Q2 2013.
EZ GDP to contract 0.4%-0.5% in the full-year 2013
In the first three quarters of 2013, EZ real GDP contracted 0.7% YoY, as against 0.5% in the corresponding period last year. Although the PMI indices for October and November have been better than in Q3 2013, unexpected fall in retail sales in October continues to keep EZ GDP under pressures. Accordingly, we expect EZ GDP to remain flat or grow 0.1% QoQ in the final quarter of 2013, implying a contraction of 0.4%-0.5% for the full-year 2013.
Please refer to the attached document for the detailed report.
Regards,
ICICI Bank : Treasury Research
Contact:
Nikhil Gupta
022-4259-2180
