1. No category

Pentti Hakkarainen
Suomen Pankki
Economic Outlook
Presentation to the YIT board
17.9.2015
Julkinen
1
Themes
 Global economy
– More volatility but why?
– China’s growth model is changing
 Euro area
– Growth outlook has improved
– Monetary policy remains accommodative
 Russia
– The rouble between the hammer and the anvil
– Outlook for GDP and investments is bleak
 Finland
– Finnish economy is still flying low
– Large regional divergences in house debt and prices
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
2
Global economy
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
3
Global stock markets infected by Chinese
stock market crash
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
4
Falling raw material prices partly reflecting
impaired economic outlook in China
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
5
Background for market developments:
World economy showing uneven progress
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
6
Change in the structure of economic growth
is causing moderation in China
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
7
Euro area
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
8
Total production increasing in the four biggest
Euro area economies
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
9
Favorable development in real income has
benefited private consumption
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
10
Investments supported by accommodative
monetary policy and improving financial conditions
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
11
Macroeconomic outlook
ECB Staff projection, September 2015
Euro area real GDP
Euro area inflation
quarter-on-quarter percentage changes
year-on-year percentage changes
Source:
ECB
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
12
Russia
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
13
Russia:
Oil price and the rouble
Price of Russian Urals export blend (left)
Series5
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Euro in roubles (right)
US dollar in roubles (right)
US dollars per barrel
2008
2009
One euro / dollar in roubles
2010
2011
2012
2013
2014
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
2015
Sources: Reuters and the European Central Bank
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
14
Russia:
GDP growth and its components
Private consumption
Inventories
GDP growth
14
Public consumption
Exports
Fixed investments
Imports
% change from one year earlier / percentage points (contributions)
14
12
12
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
-12
-12
-14
-14
-16
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1Q15
2Q15
-16
Source: Rosstat
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
15
Russia:
Investments in different regions
o
35
2009–2014
● ● 2015 first half
% change from one year earlier
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-20
-20
-25
-25
-30
-30
-35
-35
-40
RUSSIA
Central
FD
Moscow
Moscow
region
Northwestern
FD
Saint
Petersburg
Volga
FD
Southern
FD
Ural
FD
Siberian
FD
Far Eastern
FD
-40
Source: Rosstat
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
16
Finland underperforming Euro area in GDP
growth
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
17
Global economic developments pulled Finland to
weak growth during the first half-year
Supporting consumption:
Hampering growth:
•
Lower price of oil
•
Situation in Russia
•
Low interest rates
•
Weak competitiveness
•
Amortization-free months
•
Declining working-age population
Supporting exports:
•
Labour market matching problems
•
•
Lacking implementation of structural reforms
Euro area recovery, investments
Cutting production in the spring:
•
17.9.2015
Pentti Hakkarainen
Shutdown in oil industry
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
18
Employment situation has deteriorated rapidly
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
19
Household indebtedness at high levels
(loan stock per disposable income)
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
20
Biggest housing loans concentrated in the
big cities and growth centers
Size of housing debt by municipality,
per household with housing debt
Over EUR 112,700 (5% of municipalities)
EUR 89,100–112,700 (20% of municipalities)
EUR 71,200–89100 (25% of municipalities)
EUR 60,100–71,200 (25% of municipalities)
EUR 47,600–60,100 (20% of municipalities)
Below EUR 47,600 (5% of municipalities)
Housing loan debt categories are composed on the basis of the 5th
percentile, lower quartile, median, upper quartile and 95th percentile of the
distribution. The data refer to 2013.
Sources: Statistics Finland and Bank of Finland calculations.
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
21
As with debt, strong regional divergence in
house prices
Housing debt and house prices by municipality in Finland
210
EUR 1,000
180
150
120
90
60
30
600
1 400
2 200
3 000
3 800
EUR/ m2
The vertical axis indicates the average amount of housing loan per household with
housing debt (EUR 1,000); the horizontal axis indicates the average selling price of an
apartment in a housing company (EUR/square metre) in 2013. The diameter of a circle
denotes the aggregate amount of housing debt in a municipality.
Sources: Statistics Finland and Bank of Finland calculations.
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
22
Conclusions
 The US economy is back in the drivers seat
– BRICS have fallen one after another (but for how long)
 Growth outlook in Euro area has improved
– But potential growth is still low, debt and unemployment high
 Problems facing Russian economy
– No easy way out
 Finland: 2015 is a 4th no-growth year in a row
– Employment has deteriorated recently
– Household indebtedness at high levels and concentrated
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
23
Thank you!
17.9.2015
Pentti Hakkarainen
Suomen Pankki – Finlands Bank – Bank of Finland
Julkinen
24