Description of Graphs for Speech by Malcolm Edey, Assistant Governor (Economic)
‘The International Economy’
27 February 2004
Graph 1: G7 – GDP Growth
This graph has two panels, showing the evolution of monthly Consensus forecasts over the period Jan 2003 to Feb 2004 for year-average growth in the Group of Seven Countries (G7) in 2003 (left panel) and 2004 (right panel).
The graph shows that at the beginning of the period the Consensus forecast was for growth of around 2 per cent in 2003. This forecast declined to around 1½ per cent by the middle of the year before rising to 2.2 per cent by February 2004. For 2004, Consensus initially forecast growth of around 2¾ per cent. This declined to around 2½ per cent by the middle of the year, before rising to 3.3 per cent by February 2004.
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Graph 2: United States – GDP
The graph shows real Gross Domestic Product (GDP) growth in the US since 1990. There is a line showing the year-ended percentage change in real GDP and columns showing the quarterly percentage change in real GDP.
The graph shows that the US experienced strong growth through the second half of the 1990s, but then entered a recession in 2001. US GDP has been rising since the December quarter 2001. GDP growth accelerated through the course of 2003, reaching a very healthy 4.3 per cent in year-ended terms in the December quarter.
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Graph 3: United States – National Accounts
This is a 2-panel graph, showing data from 1995. The top panel shows quarterly and year-ended growth in real household consumption, and the bottom panel shows quarterly and year-ended growth in real business investment.
The graph illustrates that growth in household consumption has remained firm during the recent recession and subsequent recovery, and stands at around 3.8 per cent over the year to the December quarter 2003. In contrast, business investment declined sharply during the recession, falling by almost 10 per cent over the year to the March quarter 2002. Business investment has subsequently recovered and was 6.4 per cent higher over the year to the December quarter.
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Graph 4: United States – Business Activity
The graph has four panels, showing various indicators of business activity in the United States from 1999 onwards.
The top-left panel shows manufacturing production, indexed at 1999 = 100. Manufacturing production rose strongly up until mid 2000, and subsequently started declining. Manufacturing production started to rise again in 2002, but this proved to be a short-lived pick-up. Since the middle of 2003, there has been a more pronounced rise in manufacturing production, at a rate similar to that witnessed in the second half of the 1990s.
The top-right panel show US (annualised) corporate profits in US$ billion. Corporate profits were steady around US$850 billion through 1999, but then started declining, bottoming at around US$710 billion in the September quarter 2001. Corporate profits have subsequently recovered, rising particularly sharply over the six months to the September quarter 2003 to around US$1120 billion.
The bottom-left panel shows the index of business sentiment in the manufacturing sector and the bottom right the index of business sentiment in the non-manufacturing sector, as measured by the Institute for Supply Management (ISM). The bottom panels show that, after weakening earlier in the year, both measures of business sentiment have increased sharply in recent months to be at levels that indicate a healthy expansion of activity. In January 2004, the non-manufacturing index was at the highest level since the inception of the survey in 1997, while the manufacturing index was at its highest level in around 20 years.
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Graph 5: Japan – Real GDP
The graph shows real GDP growth in Japan since 1990. There is a line showing the year-ended percentage change in real GDP and columns showing the quarterly percentage change in real GDP.
The graph shows that year-ended growth in Japanese real GDP has cycled around an average of 1.6 per cent since 1990, with peaks occurring in 1990, 1996 and 2000. Following the most recent peak in December 2000, growth contracted sharply in the latter half of 2001 to reach its trough in March 2002. Real GDP growth has subsequently recovered to be 3.8 per cent in year-ended terms in the December quarter 2003.
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Graph 6: Japan – Business Indicators
The graph shows Japanese merchandise export volumes and manufacturing production since 1998, indexed at January 1998 = 100. Exports and production have generally shown a similar cyclical pattern, falling in late 1998 and 2000 and rising in early 1999 and 2002. In the second half of 2003, both exports and production have accelerated, with a particularly sharp increase in exports in recent months.
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Graph 7: Japan – Unemployment and Prices
This is a 2-panel graph, showing data from 1993. The top panel displays the unemployment rate in Japan and the bottom panel displays the year-ended percentage change in the consumer price index (excluding fresh food and the Value Added Tax (VAT) rate increase in 1997).
The top panel shows that the unemployment rate in Japan has been consistently trending upwards since 1993, with flatter periods corresponding to the cyclical upturns in GDP growth in 1996, 2000 and 2003. Since September 2001, the unemployment rate has hovered around 5.3–5.4 per cent, but has steadily declined to around 5 per cent at the end of 2003.
The bottom panel shows that inflation has generally trended downwards since 1993 and that since January 2000, Japan has been experiencing consumer price deflation. Between January 2000 and December 2002 consumer prices fell at an average annual rate of 0.7 per cent. However, the rate of deflation in consumer prices has eased since the beginning of 2003, and core consumer prices were 0.1 per cent higher over the year to December, although this is partly due to one-off factors such as rising medical expenses, a tax increase on tobacco, and rising rice prices (due to a bad harvest).
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Graph 8: China – Industrial Production
The graph shows the year-ended percentage change in China's industrial production from 1995 onwards. It shows that the growth rate in production declined steadily in the second half of the 1990s, from around 15 per cent at the start of 1995 to around 7½ per cent at the start of 2000. Since then, year-ended production growth has shown a strong upward trend, reaching 19 per by the start of 2004.
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Graph 9: Euro Area – Real GDP
The graph shows real GDP growth in the euro area since 1992. There is a line showing the year-ended percentage change in real GDP and columns showing the quarterly percentage change in real GDP.
The graph shows that GDP growth was quite strong in the second half of the 1990s, but slowed sharply in 2001. After a modest pick-up in growth in 2002, growth in the euro area has fallen away to be just 0.6 per cent over the year to the December quarter 2003.
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Graph 10: Euro Area – Confidence and Activity
The graph shows the level of business sentiment, relative to its long-run average, in the euro area and in Germany, and the year-ended percentage change in euro area GDP from 1994. The two measures of sentiment have moved closely, hitting highs in early 1995, early 1998 and mid 2000, which were associated with peaks in GDP growth. Over the past six months, both sentiment measures have picked-up strongly and are around their long-run averages, but GDP growth has not yet picked up to the same extent.
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