Friday, 29 July 2011

Greek exports: are things as rosy as they appear to be ?

We hear a lot about Greek exports lately and their outstanding performance. Well, once more, I think that things are not quite like they appear to be.

It is true that exports have ticked up in the past few months. Here's the relevant chart.

source: Eurostat

Notice that the whole spike comes from intermediate goods. Isn't that where oil products and other commodities are included ? Now bear with me to see the breakdown between intra-EU and extra-EU trade.

Here's the intra-EU chart.

source: Eurostat

Again the whole uptick comes from intermediate goods, all other categories are flat. 

source: Eurostat

Here the effect I mentioned above is more pronounced. There is an enormous spike in intermediate goods exports to extra-EU countries, to the point that for the first time in the time span shown in the chart, extra-EU trade surpassed the intra-EU one, even for 1-2 individual months.

What all these tell me is that the spike in Greek exports is mainly driven by the uptick in commodities prices and especially oil.

Before I leave you I want to share with you a last thought. 

There is a lot of talk lately about Italy and Cyprus. Not good talk at that since some people appear to be troubled about these two economies prospects (I want to seize this chance and say that I am really sorry about the terrible events that took place in Cyprus, this summer appears to be full of sad events).

Italy and Cyprus are among Greece's top exports destinations.

source: Eurostat

If they both enter a recession then this is bound to have an effect on Greek exports, doesn't it ? Notice that exports to both of them plunged during the 2009 recession. Do you think that should they enter a recession now will it be milder or harsher than the last one...?

UPDATE,  30/07/2011

A fellow twitterer, with whom we had a conversation regarding Greek exports yesterday, pointed out a new source of Greek external trade data, namely, Panehellenic Exporters Association.

So taking advantage of just that, here is a more detailed breakdown of Greek exports for the Jan - Apr 2011 time span.

source: Panhellenic Exporters Association

In the chart above I plotted the absolute change (in mln EUR) of each exports' category. As you can see the lion's share of change stems from fuels followed by industrial products. 

If you want to see what % of change each product family accounts for, look at the following chart.

source: Panhellenic Exporters Association, own calculations

Sunday, 24 July 2011

One more troubling sign for the Euro Area

Here’s a chart about M1 for Euro-zone (or narrow money if you prefer) the least loved of all monetary aggregates. The last few years it has been dubbed more or less irrelevant by some researchers. Well, I happen to disagree. And the following picture, always in my opinion, is deeply troubling.

source: ECB

This is the most sensitive monetary aggregate to tightening by central banks, since it is comprised in a large part by non-interest bearing currency. So, when a central bank starts tightening M1 growth rates start plummeting and vice versa.

As we can see from the chart, after ECB started easing back in 2008 M1 started increasing rapidly, though at about 4/2010 with no tightening in sight, growth rates of M1 started falling again.

Currency in circulation is the most liquid component of M1 and is mainly held by households to finance consumption expenditures. Increased currency holdings could be induced by low interest rates too. 

Some could think that, wait ECB has started tightening now. The thing is that this fall in M1 growth rates has started almost a year before ECB started tightening. Outstanding stocks of M1 have been flat for many months now, something witnessed only in the midst of tightening cycles before.

source: ECB

With interest rates at historically low levels, the fact that M1 has been flat for that long speaks volumes about the momentum of households’ final consumption expenditure…

source: Eurostat


Thursday, 21 July 2011

Public services in Greece...

While leafing through the Eurostat database for public services I noticed something that is “a bit” peculiar to say the least. Here's the gist of it.

Let's talk about education first. The Greek state's expenditures for the provision of educational services are lower than the Euro Area average. Here’s the chart.

source: Eurostat

When we look at compensation of employees of the sector though the picture is somewhat different. The said differential was always narrower but since 2003 the differential was almost cut down to zero and in 2008-2009 compensation of employees (as a % of GDP) for Greece was higher than the Euro Area average.

source: Eurostat
Next stop, health services. Here too total expenditure for health services is lower for Greece when compared to the Euro Area average.

source: Eurostat

Again, when we get down to employees’ compensation, things are different.

source: Eurostat

Almost for the length of the time interval shown in the chart, compensation of employees (always as a % of GDP) was higher for Greece, in stark contrast with overall expenditure.

In my humble opinion it really boils down to what the ulterior goal of the service provider is. I’m not going to say anything else, I’ll let you draw your own conclusions…