Wednesday, 2 July 2014

Why it is hypocritical to be worried about Greek exports just now.

I haven’t written about exports for a while, no scrap that, I haven’t written a post altogether in quite a long time. What prompted today’s post is the fact that a lot of people, bodies relevant to exports/entrepreneurship even, have been making quite a lot of noise regarding the plummeting of Greek merchandise exports in the first months of 2014. I find that quite shocking and hypocritical to be honest for a couple of reasons. In order to find what those reasons are I’m afraid that you have to read the remainder of the post though.

Here’s a chart with a breakdown of change in merchandise exports according to their destination.

source: Eurostat, own calculations

Exports to both EU27 countries’ and elsewhere have been declining on a year over year basis and what’s more exports to nonEU27 countries have been posting very hefty declines.

If you want a more smoothed out view of the chart above, here it is.

source: Eurostat, own calculations

In 2011 I had written that the phenomenal spike in Greek exports was mostly due to oil products that were mainly channeled tonon-EU countries. I think that it is interesting and revealing to take a look at how oil-related and non-oil exports have fared these past few years.

source: Eurostat

source: Eurostat, own calculations
source: Eurostat, own calculations

As you can see non-oil exports have been stagnating the whole period following the great trade collapse in 2009. What growth there was, was indeed in the oil products segment.

This is why I am shocked that relevant bodies are making noise regarding Greek exports just now. I don’t know about you but the whole scene makes me think of a bunch of people conversing at a post-funeral coffee-offering setting and trying to reach conclusions about what will make the deceased “feel better”. It’s a tad absurd, isn’t it? These noises should have been made 3-4 years back. 

P.S.  If you would like to see how oil-related and non-oil exports have fared for EU27 and non-EU27 countries here are a couple of charts.

source: Eurostat, own calculations
source; Eurostat, own calculations

(The fact that exports to EU27 countries have fared relatively better than those to non-EU27 countries can (at least partly) be blamed to the plummeting of EM currencies during early 2014 which significantly reduced purchasing power among those countries' consumers/firms)

Wednesday, 16 April 2014

Greek manufacturing: a couple of good signs beneath the surface

Greece’s industrial production index has risen in the past 3-months something that hasn’t happened since 2007. Of course claiming that Greek manufacturing is out of the woods would be wishful thinking. As it is always the case with Greece nothing is as straightforward as it seems.

Focusing on manufacturing, beyond the two consecutive months of rising production, the most encouraging sign in my humble opinion is the number of sub-sectors currently in expansion territory, something also not witnessed since 2007.

source: Eurostat, own calculations

A good question is where is this coming from?

source: DG ECFIN Industry Survey

If one believes in survey-derived data, exports order books are stagnating, while the overall picture seems to be slowly improving which leads us to the conclusion that the past few months spike is driven by the internal market.

source: DG ECFIN Industry Survey

Production expectations appear to be rising as well but selling-price expectations do not exhibit the same upward trajectory.  This could mean that any growth in turnover could be more subdued. 

Other than that the sector appears to suffer from the same problems as it did a few months ago (at least according to the survey respondents).

source: DG ECFIN Industry Survey

Financial problems remain, meaning that banks are still very strict when it comes to lending.  

One could take a look at the charts above and think "good, the internal market appears to be stabilizing". Don't get me wrong that is undoubtedly a good thing. What doesn’t make me very comfortable is the fact that Greek politics remain on shaky ground and above all what would happen to the sector should we enter a new bout of turbulence. I won’t state the obvious, i.e. that the sector lost a very good opportunity to internationalize and diversify its client base since many people could claim that the banking crisis made that very hard. I will give the proponents of that the benefit of doubt but, for what is worth, I am not overly convinced by that argument.