Monthly Archives: July 2015

31/7/15: Irish 1Q 2015 Growth: Quarterly Growth in GDP and GNP

Having looked at sectoral growth contributions for 1Q 2015 and trends in annual (y/y) growth rates in GDP and GNP, let's take a look at quarterly (q/q) growth rates.

On a quarterly basis:

  • GDP at constant prices was up 1.365% q/q in 1Q 2015, which is up on 1.235% growth recorded in 4Q 2014 and on 1.206% growth in 1Q 2014. So we have acceleration in quarterly growth in GDP. We now have five consecutive quarters of positive GDP growth with rates of growth all statistically above zero. Good news.
  • GNP, however, posted a decline in q/q growth of -0.762% in 1Q 2015, which contrasts with 3.43% growth q/q in 4Q 2014 and with 1.554% growth q/q in 1Q 2014. This is the first negative growth quarter for GNP after four consecutive quarters of expansion.

Chart above also shows how dramatically higher volatility in GNP growth figures has been in recent years. Over the entire history of the current series (from 1Q 1997), quarterly GDP growth volatility (measured by standard deviation) stood at 2.0076. This fell to 1.42225 over the period from 1Q 2011. So volatility in GDP growth declined over the recent period compered to historical. The opposite happened with GNP, which had historical volatility of 2.24441 and volatility since 1Q 2011 of 2.6658. So volatility increased for GNP.

Let's look at business cycle data. First, chart below shows contractions and expansions based on GDP q/q growth figures alone:

Next, using both GDP and GNP figures:

The two charts above reinforce the argument that we do indeed have a pretty robust recovery, with 4-5 out of the last 5 quarters on solid expansion trend based on both GDP and GNP, five on basis of GDP alone.

So on the net, the results on a quarterly basis are weaker than on the annual basis, with GNP posting an outright contraction. One consolation is that GNP decline of 0.762% q/q in 1Q 2015 is much shallower than Q4 and Q2 2013, as well as all other cases of declines from Q3 2008 on.

However, negative growth in GNP is worth looking closer at, which I shall do in subsequent posts, so stay tuned.

31/7/15: Irish 1Q 2015 Growth: Annual Growth in GDP and GNP

As promised in yesterday's post, I am continuing to cover the latest data on Irish National Accounts for 1Q 2015. In the first post, I looked at GDP at Factor Cost - the sectoral activity feeding into GDP headline numbers.

This time around, let's take a look at real GDP and GNP trends.

First - y/y growth  rates:

  • Sectoral activity (measured by the GDP at Factor Cost) added some EUR2.47 billion to the real GDP increase in 1Q 2015 compared to 1Q 2014. This resulted in total real GDP growth of 6.51% y/y in 1Q 2015, up marginally on 4Q 2014 annual rate of growth of 5.98% and significantly higher than 1Q 2014 annual rate of growth of 4.13%.  This is strong performance and the good news. 
  • From the top headline number, we now have third consecutive quarter (from 3Q 2014) when 4 quarters cumulative output is in excess of pre-crisis peak levels in real (inflation-adjusted) terms. Which is very good news too. Ironically, on GNP side, we now have four consecutive quarters of cumulated 4Q output in excess of pre-crisis peak. Overall, 1Q 2014 marks the seventh consecutive quarter of positive y/y GDP growth.
  • Meanwhile, GNP posted 7.27% growth y/y in 1Q 2015, which was, imagine that, slower than 9.00% expansion recorded in 4Q 2014, but faster than 4.30% growth in 1Q 2014. 
  • Normally, we would be exceptionally happy with this rate of GNP growth, but since 2013, GNP figures carry substantial 'pollution' from accelerated tax optimisation schemes known collectively as contract manufacturing. Still, faster growth in GNP than GDP suggests that a lot of growth this quarter is coming from organic, real growth on the ground, although we cannot tell how much exactly.
  • Overall, we now have the seventh consecutive quarter of y/y growth in GNP, which is good.

As long-term trends go, the chart below illustrates ongoing recovery in GDP and GNP

As far as the obvious point goes: there is a strong trend recovery in both series, which (sadly, I have to repeat this) is good news. One interesting thing to note is that trend for GNP recovery leads trend for GDP recovery. The reason for this is less pleasant than we like to think: instead of increasing contribution to activity from domestic economy, much of this lead is driven by changes in MNCs tax optimisation schemes, under which:

  1. External activity is being booked into Ireland under 'contract manufacturing' schemes; and
  2. Many profit-generative activities by MNCs are turning into cost-centre activities (booking higher costs into Ireland).

The latter point can be seen by looking at the relationship between GDP and net factor payments abroad, illustrated below in the form of declining share of GDP accounted for by profits & royalties repatriation abroad. This trend is likely to continue and accelerate as MNCs get to more aggressively use our latest tax 'innovation' - the knowledge development box.

Thus, the chart above gives us some, very indirect, indication of how dodgy are our GNP statistics becoming. Though, more on that in subsequent posts.

In addition to the net income outflows, the chart above shows the trend of declining GDP/GNP gap. Current 1Q 2015 GDP/GNP gap is at 18.07%, against the average over 2013-present of 17.28% and a 3mo average of 15.58%, which suggests two driving factors: higher GDP activity and increased outflow of booked profits, alongside exchange rates effects. The latter factor is important as it further compounds multiple distortions in the data from the MNCs.

In summary, evidence continues to show strong growth performance both in GDP and GNP in real terms, with some lingering questions as to the nature of this growth in relation to the MNCs activities here.

Stay tuned for quarterly growth analysis.

How US decides to work with some alleged abusers but not others?

Boz writes about a new tool that might be available to the US to punish foreign officials who engage in serious human rights violations.
Welcome to S. 284: The Global Magnitsky Human Rights Accountability Act. It takes the US sanctions regime against Russia (which is very similar to the structure of the Venezuela sanctions passed last year), and applies them globally. Any government official or member of a security force who engages in extrajudicial executions or other serious violations of human rights can have their US visas revoked and assets seized inside the US.
As he alludes to in the title of his post, the sanctions could be applied to any number of countries in the Americas - US sanctions against Venezuela are about to be applied to Colombia, Mexico, Honduras, Nicaragua, Ecuador, Cuba, etc.

Guatemala's Mauricio Lopez Bonilla. El Salvador's David Munguia Payes. Honduras's Juan Carlos "El Tigre" Bonilla.

All three have been linked to corruption and / or human rights abuses yet the US seems to highly value its relationship with these three individuals. Does the US not believe the allegations? Does the US believe that the positives that each man brings (or brought) to the job exceed the negatives? These men were appointed by the Guatemalan, Salvadoran, and Honduran governments. The Obama administration has tried to take a non-ideological approach to Central America and we work to the best of our ability with those people that those governments appoint to sensitive positions? Are we providing evidence and sharing our concerns with these individuals behind closed doors rather than publicly?

I don't know. Our relationships with these individuals sure seem to undermine our efforts to fight corruption and promote respect for human rights in the Northern Triangle.

While these are clearly not the only people connected to human rights abuses and corruption, probably not even the worst, I have a hard time understanding how the US decides to work with some alleged abusers but not others.

В Сочи разразился скандал из-за свадьбы пресс-секретаря Путина: туристов выгоняют с пляжей и санаториев

Олимпийская чемпионка по фигурному катанию Татьяна Навка 1 августа нынешнего года в Сочи выйдет замуж за пресс-секретаря Президента России Владимира Путина Дмитрия Пескова. На мероприятие приглашено более ста вип-гостей.
Мероприятие состоится в грандотеле "Родина", принадлежащем олигарху Олегу Дерипаске, сообщает "Блокнот".
Как сообщил источник в бутик-отеле, для церемонии уже все готово. Расставлены шатры, привезена необходимая мебель. Заезд большинства гостей будет сегодня в течение дня и в первой половине 1 августа.
Из-за беспрецедентных мер безопасности, которые приняты перед громкой свадьбой, уже успел разразиться скандал. Отдыхающих на пляжах, расположенных рядом с "Родиной", на время проведения мероприятия попросят плавать и загорать в другом месте.
"Все делается для спокойствия и удобства молодоженов и гостей. Пляжи будут под охраной. Сегодня начали расселение туристов из трех соседних санаториев. Людей перевезут в другие места на три дня, как раз на время проведения свадьбы, – рассказал источник в отеле. – Когда все закончится, их спокойно вернут в номера. Главное, чтобы высокопоставленные гости чувствовали себя в безопасности, и им не докучали зеваки и журналисты".
Свадьба в отеле "Родина" знаменитым молодоженам обойдется более, чем в 5 миллионов рублей.
Говорят, из знаменитостей на свадьбу приглашены Яна Рудковская, Анна Семенович, Елена Север, Ольга Слуцкер, Алла Михеева, Людмила Митволь, а также партнеры Навки по ледовому шоу Алексей Ягудин, Татьяна Тотьмянина, Роман Костомаров, Мария Петрова и другие. 
Угощать гостей собираются морскими деликатесами, которые привезут из Москвы. На праздничном столе будут все виды устриц, крабы, мидии, тартары и карпаччо из морепродуктов, икра, всевозможные салаты и другие холодные закуски. А развлекать молодоженов и гостей будут в том числе краснодарские коллективы, в частности Кубанский хор. Через день после официального мероприятия для всех гостей запланировано еще одно – на Красной поляне в одном из люксовых отелей.
После торжеств молодожены отправятся в свадебное путешествие. 
Татьяна Навка и Дмитрий Песков познакомились в 2010-м году. Год назад Навка родила ему дочь Надежду.

Крымчане набросились на оккупантов Аксенова из-за отсутствия туристов ВИДЕО

В Крыму жители села Поповка обратились к главе оккупантов Крыма Сергею Аксенову с просьбой провести отмененный фестиваль "Befooz". 
Видео с обращением местных жителей обнародовало "Информбюро Евпатории".
Крымчане сетуют на бездействие оккупационных властей. По словам жителей, в селе сейчас совершено нет туристов. 
Одной из причин являются автомобильные очереди на Керченской переправе, которые растягиваются на километры.
Во-вторых, на побережье выключают свет, это создает неудобства не только для местных, но и для туристов, в первую очередь.
"Казантип" был единственным способом заработка, признались местные жители. 
"На сегодняшний день газификация села прошла за счет сбора денег с "Казантипа", освещение улиц произошло за счет денег с фестиваля "Казантип", новый водовод в селе, мы были абсолютно без воды, произошел за счет фестиваля "Казантип", - рассказала одна из местных жительниц села.
Также жители поселка обратились к члену Общественной палаты Крыма Жеребцову, назвав его некомпетентным во всех областях. 
Люди считают, что Жеребцов не имел права безосновательно утверждать, что Поповка лидирует по количеству преступлений.
Как известно, ранее на территории Поповки проходил известный фестиваль "Казантип", ставший визитной карточкой села. 
В этом году должен был состоятся фестиваль "Befooz". Но прокуратура аннексированного Крыма возбудила уголовное дело относительно "приготовления к сбыту наркотиков" на фестивале.