Friday, November 12, 2004

Slower, slower, much slower everywhere.

First we heard that GDP growth in the third quarter in the UK was an annualized 1.6%, this following five consecutive quarters in which annualized growth exceeded 2.8%.

Then we heard that German annualized GDP growth in 2004:III was a pathetic 0.4%. The country's annual growth rate over the last four quarters stands at a mere 1.3%, and according to the German statistics office,

"The decisive factor in the weak economic growth in the third quarter was - in contrast to the four preceding quarters - declining exports."
Then we hear that France, the economic powerhouse of the eurozone (yes, it's true, don't laugh) racked up the same pathetic growth as Germany in the third quarter, a bleak annualized 0.4%. Economists are blaming low consumer spending, which goes a long way in explaining why US exports to France in July and August were the lowest two months of the year.

Finally, news comes in that Japan is also struck with the same malaise that is squeezing Europe.

Japan�s economy in the three months to September grew a meagre 0.1 per cent in real terms quarter-on-quarter, underscoring concern that the country�s most promising post-bubble recovery may be running out of steam.

In nominal terms, discounting unadjusted for the effect of deflation, the economy barely budged, growing at just 0.01 per cent, according to government figures released on Friday.
Well, at least we can be cheered by the persistence of Japanese deflation driven in part by falling Japanese wages which reduces US exports and inflates the current account deficit even more to be financed by Bank of Japan purchases of US debt to further delay tax increases, buoy our consumption and keep this dysfunctional cycle in continual motion.

Recall that two-thirds of the relatively large drop in the US trade deficit in September was due to falling imports, just one-third due to rising exports. US export growth is flagging dramatically since last year,

Real annualized export growth (SA)

2003:IV . . . 4.10%
2004:I . . . 1.78%
2004:II . . . 1.77%
2004:III . . . 1.26%

and with these growth figures from the largest advanced capitalist countries, promises to fall even further.


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