19/6/2012: IMF raises more funds at Los Cabos

IMF has secured some serious money at Los Cabos G20. From Christine Lagarde statement today:

"A number of IMF member countries have today announced pledges to boost IMF resources, completing the effort launched jointly at our Spring Meetings in April 2012 by the International Monetary and Financial Committee (IMFC) and G-20 (see Press Release No. 12/147). Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism. As a result, total pledges have risen to US$456 billion, almost doubling our lending capacity."

Here's a table. Stars mark countries that contributed at G20 meeting in Los Cabos:

Keep in mind - contributions totals are new contributions on top of existent ones, so IMF is not running out of money. Spain will make things worse, but it too will not put IMF over the top... not yet. 


You can read the above as the 'good news': IMF got more fire power to deal with the crises. You can also read it as the bad news: in desperately seeking its next debt fix, Europe has de facto surrendered its last bastion of geopolitical influence - the IMF - to the new economies. The road that led us to Los Cabos marks that change from the Euro area being the controlling power over the IMF, if only in conjunction with the US, to it becoming the largest borrower from the IMF. With this change, we might as well recall that ten years ago, Brussels leaders were talking about this being a European Century.

18/6/2012: Told ya so... Greek tax collection slumps during elections

Yesterday, I commented that during the elections, Greeks have stopped pushing through austerity measures so as not to aggravate the electorate. When challenged to explain what I meant I said that during the elections, Governments pay their debts to businesses on time, pay suppliers on time, stop enforcement actions on taxes due and stop tax reforms. Here it the confirmation that this has happened: link. Note Novotny saying that Greek tax collection is virtually halted during elections and will now be restarted and recent austerity measures are said to add hundreds (if not thousands) of unexpected euros to tax bills.

Update 25/6/2012: this just in - Greece exceeded targets for hiring civil servants and effectively suspended structural adjustments for two months during elections (link). 

18/6/2012: Irish Trade in Goods: April 2012

In the previous post (here) I highlighted some concerns emerging from April 2012 data on trade in goods. Now, let's take a look at actual data. All data is seasonally adjusted.

April imports volume came in at €3,561 million, down 22.5% or €1,034 million on March 2012 and down 27.61% or €1,358 million on April 2011. Historical average for monthly imports is €4,417 million, while crisis period average is €4,121 million. 12mo MA is €3,945 million. All of this means that current April imports are seriously under-trend and we can expect either an uptick going forward or continued weakness. The former would imply recovery in exports, the latter would imply continued slowdown in exports.

Compared to same period 2010, Imports are now running down -15.64%.

April volume of exports was €6,993 million down €713 million or -9.25% m/m and down €584 million or -7.71% y/y. Exports in April were down 3.08% on April 2010. Current level of imports is significantly below historical average of €7,289 million and crisis period average of €7,407. 12mo MA is €7,647.

Trade surplus has risen on foot of rapid fall off of imports despite a rather pronounced drop in exports. Trade surplus stood at €3,432 million, up €320 million (+10.28%) m/m and up €774 million (+29.12%) y/y. Compared to April 2010, April 2012 trade surplus for goods trade is up 14.63%.

Average monthly surplus is €2,872 million and crisis period average is €3,286 million. 12mo MA is ahead of both at €3,702 million.

January-April 2012 imports are down 7.2%, exports are down 0.9% and trade surplus is up 7.6% year on year.

Imports intensity of exports (or ratio of exports €€s per € of imports) is now at 196.4 - up on March level of 167.7 and up on 154.0 in April 2011. Historical average ratio is 168% and crisis period average is 182%. 12mo MA ratio is 195 and January-April 2012 average ratio is up 6.6% y/y.

The CSO has not reported any terms of trade indices since December 2011.

18/6/2012: Irish Trade: April 2012 disappoints

Irish trade stats for trade in goods are out for April. The numbers are, frankly put, alarming.

Remember, we are supposed to generate robust exports growth in order to even sustain the misery of the ongoing austerity. April 2011 SPU envisioned exports growth of 6.8% in 2011 and 5.7% in 2012. Budget 2012 envisioned 2011 exports expansion of 4.6% and 2012 exports growth of 3.6%. April 2012 SPU set 2011 achieved exports growth of 4.1% - down massive 2.7 percentage points on year-ahead forecast of April 2011 and down 0.5 percentage points on Budget 2012 assumption. But more significantly, April 2012 SPU revised 2012 projected exports growth to 3.3%. So within a year, exports forecast for 2012 has dropped from 5.7% to 3.3%.

Even more realistic IMF is projecting exports growth of 3.0% this year (see the first table here).

And the latest data is not encouraging. For tarde in goods only, January 2012-April 2012 period total volume of imports is down 7.17% y/y, while total volume of exports is down 0.87%. Not up 3.3%, but down almost 1%. Trade surplus is up 7.7%, but that is due to fall-off in imports that can mean only two things: either imports accelerate much faster than exports in months ahead as MNCs rebuild their diminishing stocks of inputs, or imports do not accelerate as MNCs cut back exports output. Not a good thing.

And worse. In January 2012, seasonally adjusted exports grew robust 14.1% y/y, but in February they shrunk 9.8%. This was followed by 1.5% growth again in March and now it is followed up by a massive 7.7% contraction in April. Thus average rate of growth in exports in the first four months of 2012 is -0.59%. Things are volatile in goods exports, but that is an alarming trend.

I will deal with detailed exports and trade stats for goods for April in the second post - stay tuned.

18/6/2012: Russian Ruble Note

For the ongoing Irish trade mission to Russia, IRBA issued the following note to our members concerning the current FX environment relating to Russian ruble (click on individual slides to enlarge):

17/6/2012: Stability & Greek elections

Quote of the week:

Pamela McCourt: "Stability in language is synonymous with rigor mortis. - Ernest Weekley, lexicographer". To EU & its 'national' elites: watch what you wish for, for it just might happen.

And in light of the Greek elections results, 'stability' in the euro area is, indeed, a form of rigor mortis. Need proof? Here's the EU statement on the Greek elections results, quoted in full [emphasis mine]:

"The Eurogroup takes note of the provisional results of the Greek elections on 17th June, which should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth.

The Eurogroup acknowledges the considerable efforts already made by the Greek citizens and is convinced that continued fiscal and structural reforms are Greece’s best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area.

The Eurogroup reiterates its commitment to assist Greece in its adjustment effort in order to address the many challenges the economy is facing.

The Eurogroup therefore looks forward to the swift formation of a new Greek government that will take ownership of the adjustment programme to which Greece and the Eurogroup earlier this year committed themselves.

The Eurogroup expects the Troika institutions to return to Athens as soon as a new government is in place to exchange views with the new government on the way forward and prepare the first review under the second adjustment programme."

So you have to be a bit of an optimist to read any of the above as a commitment by the Eurogroup to any sort of change in the Greek bailout terms. And absent significant and rapid changes in the programme, there is not a snowballs' chance in Hell that Greece is going to satisfy these conditions in the medium term. Stability of status quo reaffirmed in the Greek elections results is, in fact, the death warrant to the yet-to-be formed Greek Government.