Comparative First-Quarter Growth

June 2, 2009

Advanced economies contracted sharply but not uniformly so last quarter.  In a comparison of the United States, Japan, Euroland, Britain and Canada — which comprise the Group of Seven — Japan suffered the largest drop in real GDP (15.2% seasonally adjusted annual rate), followed by Euroland (9.8% saar), Britain (7.3% saar), the U.S. (5.7% saar) and Canada (5.4% saar).  Japan experienced either the worst or second-to-weakest performances for all major components of final demand but had the smallest drag from inventory run-off in the bunch.  Only in the United States did personal consumption rise.  The smallest drop in investment including construction occurred in Britain but was still very hefty at 14.2% saar.  U.S. and Japanese investment each tumbled over 30% saar.  Somewhat ironically because of all the scare talk about the U.S. fiscal outlook, public spending in the U.S. actually fell 3.5% saar, whereas such rose between 0.9% saar and 1.2% saar in the four other economies.  Exports plunged by 70% saar in Japan and fell by between 22.1% saar and 33.5% saar in the other places.  The drag on growth from inventories, expressed in percentage points (ppts), was highest in Canada (negative 3.6 ppts), followed by 2.9 ppts in Euroland,  2.3 ppts each in Britain and the United States and just a single percentage point in Japan.

Not only did final Japanese demand get whacked the most, but the composition of growth there was the most worrisome in the group.  The bigger the inventory rundown, the more promising generally are future growth prospects.  As elsewhere, however, the signs point to a moderating Japanese downturn in 2Q09.  Industrial production there jumped 5.2% in April, and surveyed producers expect significant rises in May and June as well.  But all that strength may prove no more than a dead-cat bounce from the free-fall of 4Q08 and 1Q09.

In the table below, the five economies are ranked in ordinal succession from strongest (left-most) to weakest (right-most) for first-quarter growth in real GDP, personal consumption (C), capital investment (I), public spending (G), exports (X) and inventories (Stox).  EA denotes the euro area.

GDP Cda U.S. U.K. EA Jpn
C U.S. EA Cda Jpn U.K.
I U.K. EA Cda Jpn U.S.
G U.K. Cda EA Jpn U.S.
X U.K. EA U.S. Cda Jpn
Stox Jpn U.S. U.K. EA Cda

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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2 Responses to “Comparative First-Quarter Growth”

  1. millie robinson says:

    what is the percentage of CAD of GDP of Austrlia? do you know ow to find out this information. preferably current stats (08-09)

  2. larrygreenberg says:

    I presume you are asking what the percentage of Canadian GDP is represented by Australian GDP. If you do two searches, Canadian GDP and Aussie GDP, you get the following estimates for 2007 GDP in PPP terms: Canada $1.295 trillion, Australia $0.773 trillion. So your answer is roughly 60%.