Globalisation, regionalism and economic...
Transcript of Globalisation, regionalism and economic...
Globalisation, regionalism and economic interdependence
A euro area perspective
Filippo di MauroEuropean Central Bank
Asian Development Bank7 April 2008
2
A new book…
3
QUESTIONS
• How is the Euro Area affected by the external environment, by how much and in what circumstances?
• What was the impact of monetary union and how the latter interacts with globalisation forces?
4
How much does the international environment matter for the
Euro Area?
5
Globalisation is associated with higher trade and imports
Imports in the industrialised countries(Volume index, 1991=100)
Source: IMF World Economic Outlook.
90
130
170
210
250
290
330
1991 1993 1995 1997 1999 2001 2003 2005
90
130
170
210
250
290
330
U nited Kingdom
Euro area
U nited States
Japan90
130
170
210
250
290
330
1991 1993 1995 1997 1999 2001 2003 2005
90
130
170
210
250
290
330
U nited Kingdom
Euro area
U nited States
Japan
6
Euro area is more open than other major economies …
Openness of the euro area, the United States and Japan(as percentage of GDP, in %)
Source: ECB calculations.Note: The degree of openness is measured as exports plus imports as a percentage of GDP, average 1997-2006. Euro area based on extra euro area trade.
0%
5%
10%
15%
20%
25%
30%
35%
40%
euro area(1997-2000)
euro area(2001-2006)
U nited States(1997-2000)
U nited States(2001-2006)
Japan (1997-2000)
Japan (2001-2006)
perc
enta
ge o
f GD
P
goods services
0%
5%
10%
15%
20%
25%
30%
35%
40%
euro area(1997-2000)
euro area(2001-2006)
U nited States(1997-2000)
U nited States(2001-2006)
Japan (1997-2000)
Japan (2001-2006)
perc
enta
ge o
f GD
P
goods services
7
Interaction with foreign environment is lately higher than average
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1984 1986 1989 1992 1995 1997 2000 2003
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Full sample 5-year rolling sample
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1984 1986 1989 1992 1995 1997 2000 2003
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Full sample 5-year rolling sample
Correlation between euro area and foreign real GDP growth
(Correlation coefficients)
Source :ECB. Source: ECB
Euro Area
USA
0
0.5
1
1.5
2
2.5
3
3.5
4
1974 1979 1984 1989 1994 1999 2004
Euro Area
USA
0
0.5
1
1.5
2
2.5
3
3.5
4
1974 1979 1984 1989 1994 1999 2004
The growth rate of GDP per-head (5 yrs moving average, in %)
8
EA GDP
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006-20
-15
-10
-5
0
5
10
15
20
EA GDP
World imports
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006-20
-15
-10
-5
0
5
10
15
20
net trade contribution to EA GDP
EA GDP
World imports
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006-20
-15
-10
-5
0
5
10
15
20
Net trade contributions to EA GDP (index: 1980=100; 4-quarter moving average; year-on-year growth rate)
II. Global downturn
Transmission channels are different across episodes
Source: ECB staff calculations.Latest observation refers to 2006 Q4.
I. Asian crisis
III. Sluggish growth
9
US idiosyncratic shocks have rather low impacts….
Effects of a US domestic demand shock (1 p.p. of GDP) on GDP of other countries/regions (in percent)
Source: Dées, Vansteenkiste: The transmission of US cyclical developments to the rest of the world, ECB Working Paper Series.
0
0.2
0.4
0.6
0.8
1
1.2
Euro area Japan LatinAmerica
ODE EmergingAsia
Rest ofEurope
U K U S
Direct trade effect Trade effect incl. echo effect GVAR
0
0.2
0.4
0.6
0.8
1
1.2
Euro area Japan LatinAmerica
ODE EmergingAsia
Rest ofEurope
U K U S
Direct trade effect Trade effect incl. echo effect GVAR
10
Source: NiGEM simulations.
The impacts become larger when the shocks turn global.
Simulation results of housing turmoil(percentage point deviation from baseline growth rate)
2007 2008 2009 cumulated loss
US real GDP growth -0.1 -0.8 -0.4 -1.3EA real GDP growth 0.0 -0.3 -0.3 -0.6
0.5
US real GDP -0.5 -1.9 -1.0 -3.4EA real GDP -0.2 -1.3 -1.2 -2.7
0.8
Scenario 1
Scenario 2Elasticity EA growth to US shock
Elasticity EA growth to US shock
11
For the current episode….it translates in a shallower downturn
US real GDP growth(in %, quarterly (lhs), annual (rhs))
Source: ECB Staff.
-2-1.5
-1-0.5
00.5
11.5
22.5
3
-4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12
Current
Average past recessions(95% confidence)
12
…with much less impacts on Euro area trade
April outlook H istor ical data
March 2008 MPE
-3
-2
-1
0
1
2
3
4
5
-4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12
-3
-2
-1
0
1
2
3
4
5
2000 Q3
2008 Q1
13
How globalisation interacted with monetary union
14
Trade channel: Interaction, globalisation, regional integration
X A, ex
GDP A
M A, ex M A, in X B, in
GDP B
M B, in M B, exX A, in
GDP AGDP EA = GDP A + GDP B + …
1. “China effect”
2. Growth of extra-M
3. Import content
II) DAMPENING FACTORS
World imports
I. USUAL TRANSMISSION MECHANISM
Source: Filippo di Mauro, Warwick McKibbin, Stephane Dées (ed.): Globalisation, Regionalism and Economic Interdependence, CUP (forthcoming).
15
China seems to explain losses in market share
Taking world imports from China out of foreign demand explains part of the loss in euro areamarket share
Euro area export market shares(In volumes; index 1992=100)
Source: ECB computations.Note: The last observation is for 2006 Q1.
90
95
100
105
110
115
1992 1994 1996 1998 2000 2002 2004 2006
Total
Excluding China
90
95
100
105
110
115
1992 1994 1996 1998 2000 2002 2004 2006
Total
Excluding China
16
… but extra - imports are displacing intra-EA imports
Change in EA manufacturing import shares by country of origin
Source: Eurostat and ECB calculations. Note: Percentage point change in import shares in total (intra+extra) euro area imports between 1995 and 2005.
-4 -3 -2 -1 0 1 2 3 4 5
China
N MS
Candidate countries
OPEC
ASEAN
Lat in America
CIS
Canada
Denmark
N orway
Sweden
Switzerland
U S
Japan
U K
Int ra-EA
% points-4 -3 -2 -1 0 1 2 3 4 5
China
N MS
Candidate countries
OPEC
ASEAN
Lat in America
CIS
Canada
Denmark
N orway
Sweden
Switzerland
U S
Japan
U K
Int ra-EA
% points
17
Net trade contribution declining
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007-15
-12
-9
-6
-3
0
3
6
9
12
15
net trade contribution to EA GDP (quarter-on-quarter growth rate; lhs)EA exports (year-on-year growth rate)EA imports (year-on-year growth rate)
Net trade contribution to EA real GDP (4-quarter moving average)
1995 2000Euro area 37.6 44.2Germany 34.7 42.8France 34 40.6Italy 31.6 35.4Netherlands 52.3 58.7
1995 2000Euro area 37.6 44.2Germany 34.7 42.8France 34 40.6Italy 31.6 35.4Netherlands 52.3 58.7
import content of exports increasing
18
Trade among euro area countries has increased since 1998, faster than for EU not EA
-10
-5
0
5
10
15
20
1997 1999 2001 2003 2005 2007
Euro area exports of goods to DK, SE, U K
Intra-euro area exports of goods
-10
-5
0
5
10
15
20
1997 1999 2001 2003 2005 2007
Euro area exports of goods to DK, SE, U K
Intra-euro area exports of goods
Euro area trade with EU, 1996-2007(values; year on year growth)
Exports Imports
Sources: Eurostat and ECB calculationsNotes: Estimates for 2007 are based on data for the first half of 2007.
-10
-5
0
5
10
15
20
1997 1999 2001 2003 2005 2007
Intra-euro area imports of goods
Euro area imports of goods from DK, SE, U K
-10
-5
0
5
10
15
20
1997 1999 2001 2003 2005 2007
Intra-euro area imports of goods
Euro area imports of goods from DK, SE, U K
19
Lower home bias in the EA
Home bias in bond portfolio assets, 1997-2006(in %)
Sources: BIS, IMF, Thomson DataStream, ECB calculations.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Euro area U nited States Japan
1997 2001 2002 2003 2004 2005 2006
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Euro area U nited States Japan
1997 2001 2002 2003 2004 2005 2006
20
Euro area asset holdings have increased with EMU
Share of euro area portfolio assets (bonds) (in %)
Sources: BIS, IMF, Thomson DataStream, ECB calculations.
0%
10%
20%
30%
40%
50%
60%
70%
12 EM Ucountries
3 non-EM U EU 10 non-EUdevelopedcountries
7 emergingmarkets
Grand Total
1997 2001 2002 2003 2004 2005 2006
0%
10%
20%
30%
40%
50%
60%
70%
12 EM Ucountries
3 non-EM U EU 10 non-EUdevelopedcountries
7 emergingmarkets
Grand Total
1997 2001 2002 2003 2004 2005 2006
21
Euro area asset holdings have increased with EMU
Share of euro area portfolio assets (equities) (in %)
Sources: BIS, IMF, Thomson DataStream, ECB calculations.
0%
5%
10%
15%
20%
25%
30%
35%
12 EM Ucountries
3 non-EM U EU 10 non-EUdevelopedcountries
7 emergingmarkets
Grand Total
1997 2001 2002 2003 2004 2005 2006
0%
5%
10%
15%
20%
25%
30%
35%
12 EM Ucountries
3 non-EM U EU 10 non-EUdevelopedcountries
7 emergingmarkets
Grand Total
1997 2001 2002 2003 2004 2005 2006
22
Conclusions
• The impact of shocks on the Euro Area is dependent on their origin and nature
• Regional integration impacts have been as expected, driving up intra-trade, favoring lower home bias and increasing holdings euro assets
• … but impacts have been dampened in the case of trade by the strength of the globalisation forces (entrance of China)
23
The end