Monday, 11 February 2013

Greek Exports 2012 Update: some potential green shoots..?

I was trawling through trade data these days, so it was a good chance to write up a post on Greek exports and how they fared in 2012. Well, data for the whole of 2012 are not available, so the piece will be about how Greek exports fared in the 10 months of 2012, but I hope you will allow me that.

Look at the first chart.

source: Eurosta, own calculations
As you can see, according to my calculations, the value of Greek merchandise exports rose by about 13% in the Jan – Oct 2012 timespan, on a nominal basis. If one looks at export quantities (my favourite measure) then Greek merchandise exports posted a 15% increase.

I had talked about the distortion in the overall export figures due to the parabolic rise of oil products exports backin the summer of 2011. It is interesting to see, how exports fared after oil products exports have been subtracted. It turns out that the rise in value terms is below 3% but, here comes the interesting part, quantity-wise exports rose by about 10%.

That is the exact opposite of what happened in 2011. Back then exports, rose by 11% after being adjusted for oil products but decreased by 7,6% in quantity terms.

What does that mean? It means that the spike in 2011 was purely due to pricing and even masked a decline in demand for Greek products, while in 2012 a pick-up in demand for Greek products was recorded. A further point (probably the most important too) should be made here regarding that fact, but I will come back to that later.  

I would now like us to take a look at how each segment of Greek merchandise exports performed. 

source: Eurostat, own calculations

Once more, the Oil Products segment was the top performer, followed by Crude Materials, Beverages and Tobacco and Machinery and Transport Equipment. What is of note here is that Manufactured Goods classified chiefly by material posted a decline in value terms and Miscellaneous Manufactured Articles were virtually flat. 

Maybe some of you would be interested in having a picture of which segment is more important in absolute terms.

source: Eurostat, own calculations

Oil Products top that table too, followed by Manufactured Goods classified by material, Food and Live Animals, Chemicals and finally Machinery and Transport Equipment.

Now, I would like to cross-check how export values and export quantities for each segment fared.

source: Eurostat, own calculations

What is encouraging is that most segments witnessed an increase in export quantities, hence external demand. The first 4 codes, witnessed growth in export quantities but that growth was inferior to the growth in export values, so part of the increase in exports of these categories was due to pricing.

Chemicals witnessed a slight decrease in export demand, so the anemic growth recorded was due to pricing.

Now, what I was referring to earlier in the post. Manufactured Goods classified chiefly by material, witnessed a decrease in export value BUT a quite robust spike in export quantity. That was the case too for Miscellaneous Manufactured Articles, with the sole difference that they were flat in value terms. On the other hand, Machinery and Transport Equipment posted increases in both value and quantity terms. Could it be that the effects of internal devaluation have been passed through to export prices? If that is the case, we can see that the overall effect in export values was not positive thus far. Does that by any chance remind you of the J-Curve effect?  In other words, prices are faster to adjust than volumes but volumes ultimately follow posting an increase that leads to a rise in the value of exports. If that is the first part of the J-Curve effect that we’re witnessing, then export volumes should increase further and over-compensate for the lower prices of goods due to the internal devaluation. Fingers crossed that this is the case here.

Finally, here is the breakdown of growth in Intra-EU15 and Extra-EU 15 shipments.

source: Eurostat, own calculations

Positive growth comes from Extra-EU15 with Intra-EU15 shipments being a drag, as is the case for most Euro Area countries (after the overall figure has been adjusted for Oil Products).

To wrap this up, Greek merchandise exports from January till October 2012 grew marginally in nominal terms (after being adjusted for Oil Products) but not that shabbily in quantity terms. There were some sings that the first part of a J-Curve-like effect could be in progress as far as industrial products are concerned. If that proves to be the case, then in the future we should see exports (of industrial products) in value terms, rise significantly and make up for lower prices charged (of course the fact that a fair number of countries are trying to pull the exact same trick could prove to be detrimental here). Finally, as far as growth drivers are concerned, all growth came from extra-EU15 shipments with Euro Area stagnation proving to be a drag here.

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