Top Banner

of 17

Jarní predikce růstu Evropské ekonomiky, snížení odhadu (výtah z dokumentu v AJ)

Apr 03, 2018



Ivana Levá
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)



    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Euroland - Still Stuck in a Recession Rut

    Morgan Stanley & Co.

    International plc


    Key PointsAlas, the euro area recession seems set to linger a bit longer

    this spring. After a sharper then expected contraction in 4Q, we

    no longer expect a stabilisation in activity before mid-year.

    Inflation should stay below but close enough to the ECB target.

    And it does not offer a strong enough argument to cut policy

    rates given the controversy about a negative deposit rate.

    Depending on how the Italian political situation evolves, the

    eurozone could soon find itself at a cross-roads. We explore

    different policy reactions in our bull and bear cases.

    Exhibit 1

    Still Below Consensus on our Growth Forecasts

    Real GDP Forecast for 2013 (YoY%)








    Germany France Italy Spain

    Morgan Stanley Consensus EC OECD Off ic ia l govt.

    Source: EC, OECD, National data, Morgan Stanley Research forecasts

    Another round of euro area forecast cuts Our call for the

    recession to extend into early 2013 has been confirmed by

    incoming data. Q4 GDP came in weaker than expected. 1Q

    activity data is rather mixed thus far. Financial fragmentation

    remains elevated and is receding only very gradually. New

    political uncertainties have emerged post the Italian election,

    underlining that the CRIC cycle is not dead. Together these

    factors introduce small downside risk to our FY 2013 GDPforecasts, which we are cutting further below the consensus to

    -0.7% from -0.5% before. We are also shifting the cyclical

    trough out by one quarter to mid-year. While we spot some

    green shoots here and there around the euro area, they are still

    very timid, as many indicators remain subdued and meaningful

    improvements are largely confined to the manufacturing sector.

    Our surprise gap, one indicator in our business cycle compass,

    has not been able to break out of the neutral range yet, and

    hence has not provided a statistically significant signal for a

    turning point in the business cycle either.

    Exhibit 2

    Business Cycle Compass Still Stuck on Neutral












    -1.0 -0.8 -0.5 -0.3 0.0 0.3 0.5 0.8 1.0

    Grey ZoneSlowing down


    Turning Point (Down)

    Turning Point (Up)

    Strong and


    Strong and Steady

    Recession Deepening Recession Continuing





    Feb 2013

    X-Axis : Surprise Gap AccelerationDeceleration



    Source: National data, Eurostat, Morgan Stanley Research forecasts

    Looking ahead, our base case is still for a timid recovery

    in 2H. But we have had to lower our growth trajectory

    somewhat in late 2013 and early 2014. Several factors will

    likely delay stabilisation and also limit the strength of the

    recovery. An additional factor weighing on 2014 is that some

    countries, e.g. France and Netherlands, aim to postpone

    additional austerity to 2014. That year, they will have to take

    additional measures to bring the deficit to 3% of GDP. Alas, the

    ECB has not followed our initial script and cut interest rates in

    late 2012 and started OMT support in early 2013. As a result,

    financial conditions in the euro area remain relatively tight and

    financial fragmentation elevated. The EUR, even though it no

    longer seems set to overshoot, remains above fair value for

    many euro area countries even if not for the euro area as a

    whole. As a result of the growth downgrade, we should see

    some more fiscal slippage across many euro area countries.

    Exhibit 3

    Euro Economies Likely to Trough a Little Later

    Real GDP (1Q 2008 = 100)





    2008 2009 2010 2011 2012 2013 2014


    Source: Eurostat, Morgan Stanley Research forecasts

  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Our forecast reductions are concentrated in Italy, France,

    the Netherlands and Portugal in terms of countries, and in

    consumer expenditure and investment spending in terms of thedemand components. Going against the grain, we are slightly

    raising our forecasts for Germany, Austria and Ireland. All

    three seem to be benefitting more than we previously

    acknowledged from the global economic recovery and their

    strong competitive position. In the case of Ireland, the strong

    external performance is boosted by domestic factors after the

    government secured a favourable deal on the legacy debt of

    IBRC. In terms of the different demand components, the main

    source of growth over the forecast horizon will likely be external

    demand. But the external impulse will remain somewhat muted,

    given the past appreciation of the EUR and its relatively

    elevated exchange rate.

    Exhibit 4

    Capacity Utilisation Far Below Long-Term Average,Unemployment Rate Still Rising Very Steeply












    1985Q1 1989Q1 1993Q1 1997Q1 2001Q1 2005Q1 2009Q1 2013Q1







    12%Capacity Ut il isat ion Rate, LHS Unemployment Rate, RHS

    Source: European Commission, Morgan Stanley Research

    Fundamental factors still weighing on domestic demand

    With the rate of capacity utilization still in recession territory,

    with credit conditions, especially for SME, still relatively tight

    and with business sentiment still well below the long-term

    average (which we would deem to be consistent with trend

    growth), we expect investment spending to contract further,

    albeit at a slower pace, this year. Similarly, consumer spending

    is likely to retrench further as unemployment is still rising

    steeply, additional austerity is set to bite and house pricescontinue to correct in many euro area countries. In this context,

    we would stress the discrepancy between the more depressed

    levels of consumer confidence and less gloomy business

    sentiment which is close to an all time high. Euro area

    consumer spending dynamics will likely remain subdued for

    years to come as, contrary to the US or the UK, private sector

    deleveraging has not really started yet and the sovereign debt

    crisis left deep scars on social welfare systems. We will closely

    watch household savings behaviour for signs of shifts.

    Exhibit 5

    Consumers Much More Gloomy Than Corporates














    1997 1999 2001 2003 2005 2007 2009 2011 2013

    Company-Consumer Spread Industry Consumer

    Source: European Commission, Morgan Stanley Research

    Inflation below 2% not enough for ECB to cut rates again...

    We are also lowering our inflation estimates marginally for

    2014. But at 1.6%, we see inflation higher than the ECBs own

    1.3% projection. One reason for the difference is that we are

    including planned but not yet approved changes in indirect

    taxes and administrative prices that we expect to become

    effective over the forecast horizon. The ECB staff do not do so,

    under their forecast conventions.

    provided that the euro does not overshoot

    The renewed weakening in the EUR in recent weeks, which

    has already caused monetary conditions in the euro area to

    ease again according to our Monetary Conditions Index (MCI),and the fact that market interest rates are effectively

    constrained by the zero-bound set by the deposit rate, will likely

    induce the ECB to leave rates unchanged for the foreseeable

    future. At the last meeting, some members of the Governing

    Council seem to have argued in favour of a rate reduction, but

    in the end the consensus prevailed to leave rates unchanged.

    Hence, we see only an outside chance of the ECB lowering

    rates again (seeECB Watch: Hinting at Holding Operations,

    March 6, 2013).

    No credit easing either, but maybe some forward guidance

    Equally, the ECB does not seem to be in a hurry to embark on

    additional measures of credit easing, e.g. purchases of loanportfolios. While the ECB is closely monitoring financial

    conditions in the euro area, notably in the money markets, to

    assess whether its accommodative policy stance is transmitted

    to the wider financial sector and the economy, the Council

    acknowledges that some factors causing financial

    fragmentation are beyond its control. For the first time, ECB

    President Mario Draghi, at the March press conference, stated

    that the ECBs policy stance will stay accommodative for as

    long as needed possibly a first attempt at providing some

    forward guidance that ECB rates will stay low for a long time.
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Exhibit 6

    Weaker EUR Helped to Ease Monetary Conditions

    Euroland MCI and components (base: 0 = 01/01/99)


















    1999 2001 2003 2005 2007 2009 2011 2013


















    Refi Rate Effect

    Exchange Rate Effect


    3M Euribor Effect

    Source: ECB, Morgan Stanley Research

    Several factors could easily tilt the balance towards

    additional ECB easing: a marked rise in the EUR, a renewed

    downtrend in economic sentiment, or a drop-off in inflation that

    would push projections towards the deflation danger zone (see

    Strategy and Economics: What if the Euro Overshoots?

    February 4, 2013). But with the ECB apparently reluctant to

    contemplate a deposit rate cut, effective further stimulus

    through traditional interest rate policy is not sufficiently likely to

    make it our base case. Instead, we expect the ECB to ponder

    different unconventional measures to unclog the bank lending

    channel and reduce financial fragmentation.

    Our theme of the eurozone crisis being only contained,

    rather than resolved, gained traction in recent weeks (see

    European Economics: Crisis Contained, Not Resolved,

    January 7, 2013). Not only did it become clear that OMT

    activation is further off than many investors expected, but it is

    also evident that large-scale direct bank recapitalisations by

    the ESM are unlikely. Instead the political focus on creating a

    banking union has moved towards tightening capital rules and

    harmonizing bank resolution regimes, with the latter likely to

    foresee far-reaching bail-ins of bond holders and, possibly,

    even depositors. As we had feared, the bailout for Cyprus turns

    out to be rather difficult to agree politically, notably in Germany,

    and the political situation and program execution in Greece

    continue to raise concerns.

    Depending on how the Italian political situation evolves,

    the eurozone could soon find itself at a cross-roads (see

    Economics & Strategy: Framing Europe After the Italian

    Elections, March 4, 2013). The election outcome is widely seen

    as an outcry against austerity. In our view, however, it is more

    of a protest vote against economic, social and politicalsclerosis in the country. The reaction of political Europe to this

    election outcome is key for the euro area growth outlook.

    In our bull case, we assume that Europe responds by

    redoubling its structural reforms efforts, notably labour

    market reforms that lower the hurdles to job creation. In

    addition, Europe reconsiders austerity and gives countries with

    a strong reform record more time to cut deficits. Given that

    most countries already took major steps to rein in deficits,

    markets view this as positive and bond yields start to fall,

    especially in the periphery. The ECB cuts rates in response to

    downside risks to price stability emerging due to supply-side

    reforms. GDP would be stable in 2013 and expand by an abovetrend 1.8% in 2014.

    In our bear case, social unrest spreads and leads to

    political procrastination and reform blockage, challenging

    the consensus view that the worst is behind us. Financial

    fragmentation increases again, uncertainty about economic

    policy weighs on investment spending and job creation. The

    discussion about euro membership spreads to larger countries,

    including core countries where anti-euro parties are starting to

    attract voter support. The ECB does not react for a long time as

    the Council is deeply divided about non-conventional

    measures. The economy slides deeper into recession, falls

    1.7% in 2013 and barely stabilises in 2014 (-0.2%).

    Exhibit 7

    Bull and Bear Cases GDP Growth

    2012 2013e 2014e 2013e 2014e 2013e 2014e

    Subjective Prob. 60% 20% 20%

    EU-15 -0.4 -0.4 1.0 -1.4 -0.1 0.3 1.9

    EMU -0.5 -0.7 0.9 -1.7 -0.2 0.0 1.8

    Austria 0.8 0.9 1.5 -0.1 0.4 1.6 2.3

    Belgium -0.2 0.2 1.2 -0.8 0.1 1.1 2.2

    Finland -0.2 0.0 1.4 -1.0 0.3 0.7 2.2

    France 0.0 -0.3 0.6 -1.0 -0.4 0.7 1.7

    Germany 0.7 0.5 1.6 -0.5 0.5 1.2 2.4

    Greece -6.6 -4.0 0.0 -6.4 -1.4 -2.3 1.2

    Ireland 0.7 1.1 2.4 -0.9 1.3 1.8 3.2Italy -2.2 -1.7 0.4 -2.7 -0.7 -1.0 1.2

    Netherlands -0.9 -0.8 0.5 -1.8 -0.6 -0.1 1.3

    Portugal -3.2 -3.0 0.3 -4.0 -0.8 -2.3 1.1

    Spain -1.4 -1.5 0.8 -2.5 -0.3 -0.8 1.6

    Base Case Bear Case Bull Case

    Source: National data, Morgan Stanley Research forecasts
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Exhibit 8

    Euroland Detailed Macro Economic Forecasts, 2009-14E1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE 1QE 2QE 3QE 4QE 2009 2010 2011 2012 2013E 2014E

    GDP Eurostat (qoq) -0.1 -0.2 -0.1 -0.6 -0.3 -0.2 0.2 0.2 0.3 0.3 0.3 0.3

    GDP Eurostat (qoq, annualised) -0.2 -0.7 -0.3 -2.3 -1.0 -0.6 0.6 1.0 1.0 1.0 1.2 1.2

    GDP (yoy) -0.1 -0.5 -0.6 -0.9 -1.1 -1.1 -0.8 0.0 0.5 0.9 1.0 1.1 -4.3 2.0 1.5 -0.5 -0.7 0.9

    Private Consumption (qoq, ann.) -1.0 -1.9 -0.4 -1.6 -0.8 -0.4 0.4 0.4 0.4 0.4 0.8 0.8 -0.9 0.9 0.1 -1.2 -0.7 0.4

    Government Consumption (qoq, ann.) 0.7 -0.6 -0.4 -0.3 -0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.7 -0.1 -0.1 -0.4 0.0

    Gross Fixed Investment (qoq, ann.) -5.6 -6.5 -3.0 -4.4 -2.0 -1.0 0.2 1.2 1.2 1.4 1.5 1.5 -12.8 -0.2 1.6 -3.9 -2.3 1.0

    Machinery & Equipment (qoq, ann.) -10.3 -8.9 -5.0 -5.9 -3.9 -2.0 0.0 2.0 2.0 2.6 2.6 2.6 -18.7 6.3 4.6 -5.9 -3.6 1.7

    Construction (qoq, ann.) -3.9 -5.5 -1.3 -2.0 -1.2 -0.8 0.0 0.4 0.4 0.4 0.4 0.4 -9.9 -4.4 -0.3 -3.1 -1.3 0.3

    Other (qoq, ann) 4.9 -1.7 0.4 0.8 0.8 1.6 2.4 3.2 3.0 3.0 3.0 3.0 -5.3 3.8 2.3 1.5 1.1 2.9

    Contribution to Growth

    Inventories (qoq, ann.) -0.4 -0.2 -1.1 -0.4 -0.6 -0.1 0.7 0.2 0.4 -0.1 -0.5 -0.5 -0.9 0.6 0.2 -0.7 -0.3 0.1

    Net Exports (qoq, ann.) 1.6 2.0 1.6 -0.2 0.5 -0.1 -0.4 0.4 0.2 0.6 1.0 1.0 -0.8 0.7 1.0 1.6 0.4 0.4

    Final Domestic Demand (qoq, ann.) -1.5 -2.4 -0.8 -1.8 -1.0 -0.4 0.3 0.4 0.4 0.5 0.7 0.7 -2.7 0.6 0.3 -1.4 -0.9 0.4

    GDP Gap (actual versus potential) -3.6 -2.8 -2.4 -3.7 -5.2 -5.0

    Main Euro Area Countries

    Germany (qoq, ann.) 2.0 1.1 0.9 -2.4 1.4 1.0 1.4 1.7 1.6 1.6 1.6 1.6 -5.1 4.2 3.0 0.7 0.5 1.6

    France (qoq, ann.) -0.4 -0.4 0.6 -1.1 -0.8 0.1 0.3 0.3 0.7 0.8 0.7 0.7 -3.1 1.6 1.7 0.0 -0.3 0.6Italy (qoq, ann.) -3.2 -2.9 -0.8 -3.7 -2.4 -1.2 0.4 0.4 0.4 0.4 0.8 0.8 -5.5 1.8 0.6 -2.2 -1.7 0.4

    Spain (qoq, ann.) -1.7 -1.6 -1.3 -3.2 -1.6 -1.2 -0.8 0.6 1.2 1.4 1.6 1.8 -3.7 -0.3 0.4 -1.4 -1.5 0.8

    Employment, Income, Profits

    Employment (qoq) -0.4 0.0 -0.3 -0.4 -0.3 -0.2 -0.1 -0.1 0.0 0.0 0.1 0.1 -1.8 -0.5 0.5 -0.7 -0.9 -0.1

    Unemployment Rate, % of labour force 10.9 11.3 11.5 11.8 11.9 12.0 12.1 12.1 12.2 12.3 12.3 12.2 9.6 10.1 10.2 11.4 12.0 12.3

    Compensation per Employee (qoq) 0.5 0.2 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 1.6 1.8 2.1 1.7 1.2 1.2

    Real Disposable Income (qoq) 0.2 -0.7 -0.3 -0.9 -0.5 0.4

    Savings Ratio (% of disposable income) 15.3 13.8 13.4 13.7 13.8 13.8

    Gross Operating Surplus (qoq) -6.5 4.3 2.4 0.1 1.1 2.4

    Productivity, Costs, Inflation

    Labour Productivity per capita (qoq) 0.4 -0.2 0.2 -0.2 0.1 0.1 0.3 0.3 0.3 0.3 0.3 0.2 -2.5 2.5 1.0 0.2 0.2 1.0

    Unit Labour Costs (yoy) 1.7 1.3 1.5 1.3 1.4 1.2 1.0 0.5 0.3 0.2 0.2 0.2 4.3 -0.7 1.1 1.5 1.0 0.2

    Inflation (HICP), yoy 2.7 2.5 2.5 2.3 1.8 1.5 1.4 1.3 1.4 1.5 1.6 1.7 0.3 1.6 2.7 2.5 1.5 1.6

    Core inflation, yoy 1.6 1.6 1.5 1.5 1.2 1.3 1.3 1.3 1.5 1.5 1.5 1.6 1.4 1.0 1.4 1.5 1.3 1.5

    Balance Sheets

    Current Account (% of GDP) -0.2 0.0 0.1 1.2 1.7 1.8

    General Government Balance (% of GDP) -6.3 -6.2 -4.1 -3.6 -3.1 -3.1

    General Government Gross Debt (% of GDP) 80.0 85.6 88.1 93.4 97.0 98.7

    Policy Rates

    ECB Refi Rate 1.00 1.00 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 1.40 1.00 1.25 0.88 0.75 0.75 Source: National Statistics, Eurostat, Morgan Stanley Research forecasts QoQ = Quarter on Quarter, YoY = Year on Year

    Exhibit 9

    European Interest Rate Forecasts at a Glance, 2013-14E

    Current Mar 13E Jun 13E Sep 13E Dec 13E Mar 14E Jun 14E Sep 14E Dec 14E

    EURO AREAECB Deposit (Floor) Rate 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

    ECB Refi Rate (EoP) 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75

    ECB Marginal Lending (Ceiling) Rate 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

    3M Money market rate and futures 0.20 0.20 0.22 0.25 0.30 0.34 0.41 0.47 0.55


    BoE repo rate (EoP) 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.75

    3M Money market rate and futures 0.50 0.51 0.47 0.43 0.43 0.44 0.47 0.51 0.57


    Riksbank Repo (EoP) 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.25 1.50

    3M Money market rate and futures 1.26 1.26 1.25 1.29 1.37 1.45 1.54 1.63 1.72

    Riksbank's Own Repo Forecast (Avg) 1.00 0.96 0.95 1.00 1.21 1.39 1.58 1.77

    Source: Reuters, Bloomberg, Morgan Stanley Research forecasts

  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Germany Recovery Reloaded?

    Morgan Stanley & Co.International plc Elga Bartsch

    Key PointsWe are revising up our German GDP forecasts by 0.5 ppts over


    But we remain cautious on the longer-term growth dynamics in

    Europes largest economy.

    Subdued domestic demand dynamics and a balanced budget

    are likely to keep the current account surplus elevated.

    Germany saw a surprisingly sharp fall in activity in late

    2012, when GDP contracted a non-annualised 0.6%Q on weak

    foreign trade. Given the sharp surge in sentiment indicators,

    notably the Ifo business climate in recent months, it is widely

    expected that activity will bounce back sharply in 1Q. While we

    have also penciled in a rebound, we are somewhat more

    cautious given the notable gap between business surveys and

    actual activity, e.g. order inflow or production volumes. Beyond

    an initial bounce in early 2013, we would expect growth to

    return to the trend rate. Compared to November, we are slightly

    raising our estimate for 2013 to 0.5% from 0.3% and we are

    also upping out 2014 forecast to 1.6% from 1.3% before.

    While Germany should return to growth earlier than the

    euro area, we are cautious on longer-term growth. Our

    main concern is the weakness in investment spending, which

    we also deem to be a key reason for current account surplus

    remaining high. Not only did investment spending contract

    sharply last year, but concerns about energy policy, wealth

    taxes, public infrastructure and the availability of skilled

    workers are likely to weigh on investment decisions in future.

    Our concerns are supported by several large German

    corporates announcing major cost-cutting plans late last year.

    Meanwhile consumer spending should remain solid over the

    forecast horizon. Despite a gradual recovery in the course of

    this year and into next, the rate of expansion of consumer

    expenditure will likely stay modest at an average of less than

    1% p.a. over the forecast horizon. Consumer demand shouldbe support by a labour market that remains in good shape even

    though job creation will likely slow as slower growth, the

    introduction of minimum wages and sizeable pay rises in a

    number of key sectors are likely to temper corporate hiring


    Germany seems to be benefitting more than we previously

    acknowledged from the global economic recovery and its

    strong competitive position overseas. Looking at the

    breakdown of the German trade balance surplus shows that

    Germanys export success largely comes from trade withcountries outside the euro area. Given the deep recession in

    much of the periphery, Germanys trade surplus with the rest of

    the region has started to level off in recent years a process

    that we would expect to continue. Better than expected, the

    German public sector posted a small budget surplus of 0.2% of

    GDP last year. This year, we expect no meaningful further

    improvement in the budget balance on the back of the lagged

    impact of last years slowdown on the tax intake and from

    several expansionary measures ahead of the election (cut in

    pension contributions, abolition of fee for medical treatment,

    increase in income tax threshold). The debt level that until

    recently was pushed higher by bank rescues and eurozone

    bail-out, should start to level off though.

    Exhibit 10

    German Trade Surplus with EMU Shrinking








































    25Ex EMU Trade Balance, EUR bnEuro Area Trade, EUR bnEMU Imports, yoy, RHSEMU Exports, yoy, RHS

    Source: Statistisches Bundesamt, Morgan Stanley Research

    Exhibit 11

    Germany Main Macro Forecasts, 2010-14E2010A 2011A 2012A 2013E 2014E

    Real GDP 4.2 3.0 0.7 0.5 1.6

    Private Consumption 0.9 1.7 0.8 0.6 1.3

    Government Consumption 1.7 1.0 1.0 1.8 1.4

    Gross Fixed Investment 6.1 6.2 -2.2 -0.4 2.9

    Machinery and Equipment 10.3 7.0 -4.4 -2.4 3.9

    Exports 13.7 7.8 4.1 3.8 5.7

    Imports 11.1 7.4 2.3 3.8 5.5

    Contribution to GDP Growth (%)

    Final Domestic Demand 1.9 2.2 0.2 0.6 1.5

    Net Exports 1.9 0.7 1.1 0.3 0.6Inventories 0.3 0.1 -0.7 -0.5 -0.5

    Unemployment Rate (% of Labour Force) 7.1 6.0 5.5 5.8 5.9

    Real Disposable Income 0.7 -0.6 0.5 0.7 1.0

    Personal Saving Rate (% of Disp. Income) 12.1 10.2 9.9 9.9 9.6

    Inflation (CPI) 1.2 2.0 2.0 1.7 1.6

    GDP Deflator 0.9 0.8 1.3 2.0 1.6

    Unit Labour Costs -3.1 4.1 3.0 1.7 0.8

    Current Account (% of GDP) 6.0 5.7 6.3 6.0 6.2

    General Government Balance (% of GDP) -4.1 -0.8 0.2 0.2 0.5

    Primary Government Balance (% of GDP) -1.6 1.8 2.6 2.4 2.6

    General Government Debt (% of GDP) 82.5 80.5 81.4 80.4 78.0

    Net Government Debt (% of GDP) 49.8 51.3 N/A N/A N/A Source: National Statistics, Deutsche Bundesbank, Morgan Stanley Research forecasts

  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    France Fiscal Uncertainty Clouds Economic Outlook

    Morgan Stanley & Co.International plc Olivier Bizimana

    Key PointsWe expect the economy to contract in 2013 and to return to

    sub-par growth next year, on the back of fiscal tightening and

    lingering uncertainties.

    Domestic demand growth is headed towards a new normal.

    Despite an extra year to reduce the government deficit to the

    target of 3% of GDP, fiscal consolidation looks set to remain


    Lacklustre macroeconomic environment. We forecast the

    French economy to contract at an annual rate of 0.3% in 2013.

    In particular, fiscal tightening should continue to be a drag on

    domestic demand. The economy is expected to return to

    growth in 2014, although it should remain subpar, averaging

    0.6%. The risks to the outlook remain higher than normal.

    We think the uncertainty about future fiscal policy is the

    main hurdle to healthy economic expansion going forward.

    Indeed, the fear of future tax hikes could cause consumers and

    businesses to become extremely cautious about their spending

    decisions. A second risk is a worsening of the structural issues

    labour market rigidities, weak competitiveness, sizable and

    growing public debt which could further temper the

    economys momentum.

    A double-dip recession.Key data flows released in early

    2013 point to a renewed recession, with real GDP shrinking

    by 0.2%Q in the first quarter, following a contraction of 0.3% in

    4Q 2012 the technical definition of a recession is two

    consecutive quarters of contraction. The French economy

    already experienced a recession in the first half of 2012. Real

    GDP is set to restart growing at a disappointing pace in the

    second half of this year. We believe it may take a while before

    the economy advances at full speed, since the need to tackle

    fiscal problems should continue to dampen domestic demand.

    Towards a new normal. Domestic demand is expected togrow at a relatively subdued pace, well bellow its historical

    trend. Private consumption, which is the traditional engine

    of growth, should remain broadly flat. Household income

    growth should remain weak, as a reflection of continued job

    destruction and the stubbornly high unemployment. Moreover,

    given the persistent macroeconomic uncertainty, the

    household savings rate is set to remain elevated. Corporate

    investment should experience a sharp fall on average this year,

    on the back of weak demand prospects and difficult credit

    conditions. Finally, the contribution from net exports isexpected to be neutral. Exports and imports should slow

    markedly, in line with the weak foreign and domestic demand.

    Difficult deficit reduction.The European Commission is

    likely to give France an extra year to reduce its deficit to

    the threshold of 3% of GDP (see Economics and Strategy:

    France's 2013 Deficit Target, February 19, 2013). Hence, the

    risk of an austerity trap would be averted. The structural fiscal

    adjustment should nevertheless continue this year and could

    even be more significant than previously anticipated in 2014.

    Moreover, paradoxically, fiscal uncertainty is likely to increase,

    since the government has not yet laid out a comprehensive

    strategy of fiscal consolidation. Overall, we expect the generalgovernment budget deficit to fall to 3.9% of GDP (after 4.5% of

    GDP in 2012) and debt-to-GDP ratio to rise to 93.4% n 2013.

    Exhibit 12

    France Main Macro Forecasts 2010-2014E2010A 2011A 2012A 2013E 2014E

    Real GDP 1.6 1.7 0.0 -0.3 0.6

    Private Consumption 1.4 0.2 0.0 0.2 0.5

    Government Consumption 1.7 0.2 1.4 0.9 0.5

    Gross Fixed Investment 1.1 3.6 0.0 -1.7 0.7

    Contribution to GDP Growth (%)

    Final Domestic Demand 1.5 0.9 0.3 0.0 0.6

    Net Exports 0.0 0.0 0.7 0.0 0.0

    Inventories 0.1 0.9 -1.1 -0.3 0.0

    Unemployment Rate (% of Labour Force) 9.3 9.2 9.9 10.4 10.7

    Real Disposable Income 0.4 0.5 -0.4 0.5 0.4

    Savings Rate (% of Disp. Income) 15.9 16.2 16.1 16.1 15.9

    Inflation (CPI) 1.5 2.1 2.0 1.2 1.6

    Unit Labour Costs 0.8 1.2 1.9 1.8 1.6

    Current Account (% of GDP) -1.6 -2.0 -2.1 -2.0 -2.2

    General Government Balance (% of GDP) -7.1 -5.2 -4.5 -3.9 -3.5

    Primary Government Balance (% of GDP) -4.7 -2.6 -2.0 -1.3 -0.8

    General Government Debt (% of GDP) 82.6 86.1 90.1 93.4 94.9

    Net Government Debt (% of GDP) 57.3 63.0 N/A N/A N/A Source: INSEE, Morgan Stanley Research estimates

    Exhibit 13

    Towards a new normal for domestic demand









    1990 1994 1998 2002 2006 2010 2014

    Real GDPDomestic demand (excl. invent.)Domestic demand: average 1990-2007Domestic demand: average 2010-2014


    New normal

    Annual growth, %

    Source: INSEE, Morgan Stanley Research estimates
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Italy More Politics, Less Reform

    Morgan Stanley & Co.International plc Daniele Antonucci

    Key PointsPolitical instability is likely to persist, even if the process of

    government formation turns out to be successful. This might

    complicate an OMT application, if needed.

    Some institutional reforms might take place, but economic

    reforms are likely to be postponed further. As such, were

    cautious on Italys medium-term growth prospects.

    Fiscal policy is likely to remain tight, thus weighing on

    near-term growth. We now think that GDP will shrink by 1.7%

    this year, 0.5ppt more than in our previous forecast.

    Uncertain political situation

    Political uncertainty is set to continue in the near term, with the

    possibility of government formation only in late March. And its

    also likely to be a factor in the medium term, with

    heterogeneous parliaments and unstable governments

    negatively affecting sentiment. We have further cut our GDP

    forecast, and now expect a 1.7% contraction this year from

    1.2% before.

    There are scenarios where no governments can be formed (we

    assign a 30% probability): after a stalemate where an interim

    government acts as a caretaker rather than focusing on boldpolicy measures, Italy heads to the polls again. Our bear case

    is of an extended political paralysis, downside risk to growth

    through the sentiment channel, and a postponement of urgent

    structural reforms, such that GDP might shrink by nearly 3%

    this year and continue to contract in 2014.

    But there are also scenarios where an agreement on a

    programme focused on institutionalreforms can be reached

    (we assign a 70% probability). An alternative to new elections

    for which we see little appetite is either a minority government

    where the centre-left seeks external support from the Five Star

    Movement, or a broad coalition ranging from the centre-left to

    the centre-right. Both options are likely to be unstable. We thinkit would be more difficult to sign for ESM support, if needed,

    with Grillo than with a centre-left / centre-right coalition (seeFraming Europe After the Italian Elections, March 4, 2013).

    Structural reforms less likely

    With the current political situation, Italy seems unlikely to

    deliver at least for some time on much needed economic

    reforms, which Europe is asking for, to strengthen its economic

    fabric. The scar left by the recession is likely to have damaged

    the supply side of the Italian economy, thus further lowering thepace of potential growth to 0.5% or so. This is an important

    point because, with no macroeconomic levers (being part of

    the eurozone) and fiscal policy likely to remain tight under most

    scenarios, the only viable alternative is to boost long-term

    growth and resilience via microeconomic reforms.

    Fiscal policy to remain prudent

    Virtually alone within southern Europe and also compared to

    many core countries Italy has had a primary budget deficitin

    only one year over the past two decades. We expect this

    strategy to be maintained in our base case, with a rising

    surplus. But this is likely to continue to have negative

    repercussions for the economy, and is the other main reasonwhy, apart from structural deficiencies, Italian growth remains


    Exhibit 14

    Italy Main Macro Forecasts, 2010-14E2010A 2011A 2012E 2013E 2014E

    Real GDP 1.8 0.6 -2.2 -1.7 0.4

    Private Consumption 1.2 0.1 -4.3 -2.8 -0.3

    Government Consumption -0.6 -0.8 -1.0 -1.2 -0.8

    Gross Fixed Investment 2.0 -1.3 -9.0 -4.2 0.6

    Construction -3.6 -1.6 -8.4 -3.4 0.9

    Contribution to GDP Growth (%)

    Final Domestic Demand 1.0 -0.4 -4.5 -2.7 -0.2

    Net Exports -0.4 1.5 2.7 0.9 0.5

    Inventories 1.2 -0.5 -0.4 0.0 0.1

    Employment -1.0 0.8 -0.2 -0.5 0.3

    Unemployment Rate (% of Labour Force) 8.4 8.4 10.6 12.0 12.1

    Real Disposable Income -0.5 -1.1 -3.7 -1.3 -0.7

    Personal Saving Rate (% of Disp. Income) 12.8 11.6 12.1 13.6 13.2

    Inflation (CPI) 1.5 2.8 3.0 1.7 2.0

    Unit Labour Costs -0.8 1.1 1.5 2.2 0.9

    Current Account Balance (% of GDP) -3.6 -3.1 -2.5 0.6 1.0

    General Government Balance (% of GDP) -4.5 -3.8 -3.0 -2.6 -2.3

    Primary Government Balance (% of GDP) 0.1 1.2 2.5 3.7 4.1

    General Government Debt (% of GDP) 119.3 120.8 127.0 129.1 128.1

    Net Government Debt (% of GDP) 99.5 94.1 N/A N/A N/A Source: ISTAT, Bank of Italy, Morgan Stanley Research

    Exhibit 15

    Further weakness ahead in Italy

    Real GDP Growth








    2001 2003 2005 2007 2009 2011 2013








    % Q/Q (LHS)

    % Y/Y

    MS forecasts

    Source: ISTAT, Morgan Stanley Research
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Spain Rebalancing and Deleveraging

    Morgan Stanley & Co.International plc Daniele Antonucci

    Key PointsThe pace of economic contraction no longer seems to be

    accelerating, but the outlook remains weak.

    While the probabilities (20%) are symmetric, the fall in our bear

    case is bigger than the gain in our bull case.

    Deleveraging is a drag, but rebalancing is unfolding faster than


    Economic outlook still fragile, but no longer worsening

    Activity should stabilise towards year-end, somewhat later than

    expected in our previous forecast update. The negative

    carry-over effect from a sharp contraction in 4Q last year

    implies such an unfavourable base effect that in the annual

    comparison GDP will fall visibly in 2013 too. This is despite an

    improvement of the sequential pace of growth, as suggested

    by the more encouraging picture depicted by the main surveys.

    Mind the tails

    Our bear case encompasses a relapse due to the economy not

    being able to sustain a significant fiscal adjustment, coupled

    with economy-wide deleveraging. With unemployment rising

    further and GDP shrinking by 2.5%, discontent might rise too.

    Should market sentiment take a turn for the worse, this wouldraise the probability of seeking external ESM/OMT support,

    which we think to be low for now.

    Deleveraging remains a significant drag

    The overall economy is in the process of engineering a

    significant balance-sheet repair. This process is necessary and

    welcome but, as long as it continues, Spain is unlikely to

    become a quick turnaround story on the domestic front. From

    the consumer to the construction, banking and government

    sectors, the belt-tightening is such that theres virtually no

    sector that could make up for the shortfall in demand when the

    others are in a significant deleveraging mode. As such, we

    expect continued weakness on the national consumption front.

    Rebalancing story continuing

    Yet the Spanish economy is continuing to shift away from

    domestic demand, and construction in particular, and into an

    export-led model at a fast pace, as shown by the rapid

    improvement of its current account balance, which is now in

    surplus. This is underappreciated in the market, we think.

    Spains exports are structurally strong and getting stronger.

    With unit labour costs having come down for quite a while

    courtesy of recession-driven wage moderation and labourmarket reforms and productivity rising, Spain is recovering a

    good part of its lost price competitiveness, thus adding to an

    already robust export performance. We expect this process to

    continue and eventually bring back somegrowth.

    Exhibit 16

    Spain Main Macro Forecasts, 2010-14E2010A 2011A 2012E 2013E 2014E

    Real GDP -0.3 0.4 -1.4 -1.5 0.8

    Private Consumption 0.7 -1.0 -2.1 -3.4 0.0

    Government Consumption 1.5 -0.5 -3.7 -5.1 -1.8

    Gross Fixed Investment -6.8 -6.0 -10.1 -7.1 -1.5

    Construction -9.8 -9.0 -11.5 -7.2 -2.6

    Contributions to GDP Growth (%)

    Final Domestic Demand -0.9 -1.9 -4.0 -4.3 -0.6

    Net Exports 0.2 2.4 2.4 2.9 1.1

    Inventories 0.3 0.0 0.2 -0.2 0.4

    Unemployment Rate (% of Labour Force) 20.1 21.7 25.1 26.6 25.7

    Inflation (CPI) 1.8 3.2 2.4 2.2 1.1

    Current Account Balance (% of GDP) -4.4 -3.7 -2.0 1.5 2.0

    General Government Balance (% of GDP) -9.7 -9.4 -9.9 -8.0 -7.5

    Primary Government Balance (% of GDP) -7.7 -7.0 -6.9 -4.1 -3.3

    General Government Debt (% of GDP) 61.5 69.3 89.3 100.2 103.9

    Net Government Debt (% of GDP) 40.2 49.5 N/A N/A N/A Source: INE, Bank of Spain, Morgan Stanley Research estimates

    Public finances slow progress over a long timeframe

    Government debt is high and rising, and the primary budget

    deficit is still large. We think that the official growth projections

    are too optimistic. Thus, the fiscal targets remain out of reach,

    even though Spains progress is taking place somewhat faster

    than expected by the consensus. There seems to be a shifttowards an evaluation on the fiscal progress in structuralterms,

    i.e., abstracting from cyclicalswings, thus making Spains effort

    more adequate. The chances are that the European

    Commission might give Spain extra time to bring its budget

    deficit below 3% of GDP, thus giving it some economic respite.

    Exhibit 17

    Spain no longer living beyond its means

    Current Account (bn, 4Q Sum)







    1999 2001 2003 2005 2007 2009 2011










    Trade bal. ex energy Energy

    Services Current transfers

    Factor incomes CA (% of GDP, RHS)

    Source: Bank of Spain, Morgan Stanley Research

  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Netherlands Austerity Adjourned

    Morgan Stanley & Co.International plc Elga Bartsch

    Key PointsThe Dutch economy should continue to contract as domestic

    demand and net exports decline, making the Netherlands the

    weakest amongst the core countries.

    Weak labour and housing markets, pension and budget cuts,

    falling house prices and high debt levels are depressing

    consumers. Ample free capacity and tight credit conditions is

    weighing on investment spending.

    The EDP target of a 3% budget deficit will likely be missed in

    2013. We expect the government to adopt additional austeritymeasures in 2014 though and have cut our growth forecasts.

    Netherlands continues to be the weakest core economy:

    The Dutch economy should shrink further this year on our

    downwardly revised forecasts of -0.8%. Given the commitment

    to additional austerity next year, we also lowered our 2014

    forecast to 0.5%. The underperformance vis--vis the euro

    area is underpinned by survey data, where consumer

    confidence and business sentiment corrected again in early

    2013. Dutch manufacturers continue to report declining order

    books, and only recently have become less gloomy about the

    production outlook. Tight credit conditions, particularly forSMEs, will dampen investment spending.

    Housing market correction is creating headwinds: A

    number of policies, such as low taxation of homeownership,

    have artificially raised house prices in the past (see ING (ING.

    AS) Factoring in a tougher backdrop - cut to EW, February 18,

    2013). Nominal house prices have declined by around 20%

    now from the peak in August 2008, a more gradual decline than

    that seen in some of the peripheral countries. Transactions

    have plunged by 78% in Q4 2012 compared to the Q3 2008

    peak. In combination with very elevated household debt and

    what seems to be an underfunded pension system, the

    housing market is a concern.

    High household debt poses a risk to consumer spending

    and public finances: Dutch households are the most indebted

    in the euro area. Past government policy has led to households

    taking out high mortgage debt (seeEuropean Commission,

    The housing market in the Netherlands, 2012). Mortgage

    products were being designed to fully benefit from tax

    exemptions, longer maturities and more flexible terms such as

    higher loan-to-value ratio. As a result of the high leverage,

    Dutch consumer are struggling more than their euro area peerswith falling house prices because of the high proportion of

    housing assets in total household wealth. The highly

    leveraged households also pose a risk to fiscal balances

    through measures such as excluding mortgage interest rate

    from taxable income, exemption of net housing wealth from

    capital tax etc. This resulted in substantial fiscal costs equal to

    13.1bn or 2.2% of GDP in 2011. Apart from this, the

    government is also accumulating implicit liabilities through the

    national mortgage guarantee scheme equal to 24% of GDP.

    Going forward, the government is proposing applying

    restrictions on the deduction of mortgage interest payments

    from taxable income.

    Additional austerity adjourned until 2014: This year, the

    Netherlands is likely to miss the 3% deficit target set out in the

    Stability Programme. Despite a meaningful overshoot the

    government has already indicated that it will not take additional

    measures. The negative budget impact of the nationalization of

    SNS Reaalis likely to offset proceeds from selling 4G mobile

    telco licenses. Instead, the government will take additional

    austerity measures worth 4.3bn (0.7% of GDP) in 2014. The

    measures include a 1-year salary freeze for civil servants and

    healthcare workers and scrapping tax breaks worth 640mn for

    companies. Despite these additional measures, which still

    need to be finalized and approved, the deficit might not hit the

    3% target. Additional austerity will also test the coalition, which

    lacks a majority in the upper house and which thus depends on

    support from opposition parties.

    We acknowledge the contribution of Gaura Sengupta

    Exhibit 18

    Netherlands Main Macro Forecasts, 2010-14E2010A 2011A 2012A 2013E 2014E

    Real GDP 1.6 1.1 -0.9 -0.8 0.5

    Private Consumption 0.3 -1.0 -1.4 -1.5 0.1

    Government Consumption 0.7 0.1 0.7 0.3 0.0

    Fixed Gross Investment -7.2 5.7 -4.7 -3.0 1.7

    Exports 11.2 3.9 3.1 2.6 4.8

    Imports 10.2 3.6 2.8 2.3 4.8

    Contributions to GrowthDomestic Final Demand -1.0 0.5 -1.3 -1.1 0.4

    Net Exports 1.5 0.5 0.5 0.4 0.5

    Inventories 1.2 -0.1 -0.1 -0.2 -0.4

    Employment -1.0 0.0 -0.3 -0.5 0.0

    Unemployment Rate (%, ILO Definition) 4.5 4.4 5.3 6.4 6.8

    Real Household Disposable Income -0.3 -0.8 -0.5 -1.0 0.7

    Inflation (CPI) 1.3 2.3 2.5 2.3 1.8

    GDP Deflator 1.1 1.2 0.8 1.8 1.6

    Compensation Per Employee 2.0 1.5 2.3 1.8 2.5

    Current Account Balance (% of GDP) 7.7 9.7 7.8 8.7 9.0

    General Government Balance (% of GDP) -5.1 -4.4 -4.0 -3.6 -3.1

    Primary Government Balance (% of GDP) -3.2 -2.4 -2.4 -2.1 -1.7

    General Government Debt (% of GDP) 63.1 65.5 71.2 74.7 76.4

    Net Government Debt (% of GDP) 34.4 38.7 N/A N/A N/A Source: National Statistics, Morgan Stanley Research forecasts
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Belgium Walking a Fine Line

    Morgan Stanley & Co.International plc Olivier Bizimana

    Key PointsBelgiums economy is expected to almost stagnate this year

    and to recover gradually in the course of 2014.

    We fear further weakness in the core could push Belgium back

    into recession in 2013.

    Fiscal consolidation should continue in 2013, although weaker

    growth is likely to reduce the pace of adjustment.

    The Belgian economy is expected to expand at a sluggish pace

    of 0.2% in 2013, following a small contraction in 2012. We see

    a gradual, but fragile, recovery in the course of 2014, with real

    GDP increasing by 1.2%. Still, the risks to our forecasts are on

    the downside. The main threat is the persistent weakness

    of economic conditions in the core eurozone that could

    push the Belgian economy back into recession.

    In the near term, we expect business conditions to

    continue to improve somewhat. Yet, at this stage, we remain

    cautious, as Belgiums leading indicators have been volatile

    since the end of 2012, suggesting that the economic

    stabilisation is fragile. We forecast real GDP to rise at an

    anaemic 0.1%Q on average in 1H 2013, after a small

    contraction of 0.1%Q in 4Q 2012. Economic activity is

    expected to pick up pace in 2H 2013 and into 2014. In

    particular, exports should benefit from the recovery in global

    trade, as evidenced by the rebound in sentiment in the

    manufacturing sector. Yet export growth is likely to be

    constrained by slow economic growth in the core eurozone.

    Domestic demand should remain resilient, although

    growing at modest rates. In particular, we expect corporate

    investment to shrink in 2013, amid the high level of uncertainty

    and tight financing conditions. Household consumption should

    grow at a subdued pace throughout 2013, as a reflection of

    weak consumer confidence. However, the underlying

    fundamentals of consumption remain relatively solid, with aresilient labour market. Looking ahead, we project job growth

    to continue, although at a modest pace, and the unemployment

    rate to remain fairly stable at 7.5% on average in 2013 and

    2014 (from 7.3% in 2012). Whats more, we expect CPI

    inflation to slow to a rate of about 1.2% on average in 2013

    from 2.8% in 2012, which should support households

    purchasing power.

    Belgiums budget position has continued to improve. The

    general government deficit declined sharply to 2.9% of GDP in

    2012, according to our estimates (versus 3.7% of GDP in 2011).However, this level remains slightly higher than the

    governments own deficit target of 2.8% of GDP, essentially

    because of lower than expected revenue due to the economic

    downturn at the end of 2012. The government last autumn

    agreed on consolidation measures in the 2013 draft budget in

    order to reduce the deficit to 2.15% of GDP in 2013. However,

    in the meantime, GDP growth forecast for this year has been

    revised down to 0.2%, from 0.7% previously. Hence, the

    federal government needs to find additional savings amounting

    to around 2.8bn, in order to be able to meet its deficit target,

    according to the estimates of the Belgian Monitoring

    Committee. At the time of writing though, the government has

    not yet unveiled the precise measures to be implemented. Onour forecast, the general government deficit is projected to fall

    only slightly to 2.7% of GDP in 2013. The debt-to-GDP ratio

    should continue to rise to 100.4% in 2013, from 99.8% in 2012.

    Exhibit 19

    Belgium - Main Macro Forecasts 2010-14E2010A 2011A 2012E 2013E 2014E

    Real GDP 2.4 1.8 -0.2 0.2 1.2

    Private Consumption 2.7 0.2 -0.6 0.4 1.1

    Government Consumption 0.7 0.8 0.1 0.7 1.3

    Fixed Gross Investment -1.4 4.1 -0.5 -1.1 1.2

    Contributions to Growth

    Domestic Final Demand 1.3 1.1 -0.4 0.2 1.1

    Net Exports 0.7 -0.1 0.5 0.2 0.1

    Inventories 0.4 0.7 -0.3 -0.2 0.0

    Unemployment Rate (%, ILO Definition) 8.3 7.2 7.3 7.5 7.5

    Real Household Disposable Income -1.0 -1.4 0.0 1.3 1.1Savings Rate (% of Disp. Income) 15.4 14.4 15.0 15.8 15.7

    Inflation (CPI) 2.2 3.5 2.8 1.2 1.6

    GDP Deflator 2.0 2.0 2.1 2.0 1.9

    Current Account Balance (% of GDP) 1.4 -1.0 -0.4 0.1 0.0

    General Government Balance (% of GDP) -3.8 -3.7 -2.9 -2.7 -2.5

    Primary Government Balance (% of GDP) -0.4 -0.4 0.6 0.8 1.0

    General Government Debt (% of GDP) 95.5 97.8 99.8 100.4 99.8

    Net Government Debt (% of GDP) 79.8 81.3 N/A N/A N/A Source: BNB, Morgan Stanley Research forecasts

    Exhibit 20

    EMUs bellwether returns gradually to growth

    Belgium: GDP growth contributions







    Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14

    Domestic demand (excl. inventories) Inventory changes

    Net exports GDP



    Source: BNB, Morgan Stanley Research
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Greece Shock Absorption

    Morgan Stanley & Co.International plc Daniele Antonucci

    Key PointsFiscal austerity and a slowdown of core Europe will continue to

    weigh on Greeces growth in 1H 2013.

    Growth should begin to pick up gradually thereafter, as Greece

    absorbs the various shocks that have hit its economy.

    The incentive for Greece to exit the eurozone to boost

    competitiveness via a weaker exchange rate is no longer there.

    We expect Greece to achieve a primary budget surplus this

    year and maintain it thereafter.

    Fiscal and external drag

    The combination of extra fiscal tightening and a slowdown of

    growth in core Europe will mainly be felt in the first part of 2013.

    Hard data, e.g., industrial production or retail sales, show

    deteriorating economy activity in recent months, as expected.

    Diminishing Grexit fears

    Yet uncertainty around Greeces future in the eurozone a key

    factor for economic stabilisation has diminished since last

    summer. Combined with improvements in the financial sector,

    e.g., better deposits data, the dissipation of such risks is clearly

    a positive for the Greek economy (see Greece: From

    Shake-Up to Shape-Up?January 21, 2013).

    Exhibit 21

    Deposits coming back to Greece

    Deposits (ex. MFIs) (% Y/Y)








    2007 2008 2009 2010 2011 2012 2013











    Households (RHS)

    Source: Bank of Greece, Morgan Stanley Research

    Despite poor hard data, recent developments in soft data show

    that sentiment in Greece is improving. In fact, we expect to

    witness a peculiar situation of weakening hard data alongside

    improving soft data in the first half of this year.

    but rising political risks in Southern EuropeNevertheless, political developments elsewhere in southern

    Europe are a downside risk to Greeces growth outlook. The

    outcome of the recent Italian elections has introduced yet

    another source of uncertainty for the eurozone. Given the

    systemic risk that Italy poses for the region as a whole, this

    political instability could have negative ramifications for Greece

    if concerns over the eurozones weakest link re-emerge.

    Moreover, despite its small size and whilst not our base case,

    Cyprus risks reigniting systemic risk if a bailout involves

    haircuts to banks depositors or sovereign debt holders (see

    Cyprus Should We Worry?February 12, 2013). Our bearcase sees Greece shrinking by around 6.5% this year.

    If these political uncertainties prove short-lived, we expect

    Greeces recovery to pick up pace going into next year, with

    moderate growth returning sometime late in 2014. In fact, with

    the progressive attenuation and elimination of shocks from a

    severe credit crunch, fiscal austerity, structural reforms and

    euro exit fears, Greece may truly stabilise next year.

    Recouping lost competitiveness, primary surplus in sight

    Greeces price competitiveness improved substantially in the

    past year. Although this process has further to go given that

    Greece was uncompetitive even when it joined the EMU its

    worth noting that Greece has recovered virtually all the lost

    ground since the inception of the monetary union. We think that

    the incentive for Greece to exit the eurozone to boost its

    competitiveness via a weaker exchange rate is no longer there.

    We expect Greece to achieve a primary budget surplus this

    year and maintain it thereafter. Although its likely to be

    fractional in 2013, we think that it will gradually rise to over 3%

    of GDP. However, maintaining this surplus depends crucially

    on economic stabilisation and on successful implementation of

    the measures agreed with the Troika.

    Exhibit 22

    Greece Main Macro Forecasts, 2010-14E2010A 2011A 2012E 2013E 2014E

    Real GDP -4.4 -6.1 -6.6 -4.0 0.0Final Domestic Demand -8.2 -7.8 -9.0 -7.7 -2.3

    Unemployment Rate (% of Labour Force) 12.6 17.7 24.2 26.1 26.2

    Inflation (CPI) 4.7 3.3 1.5 0.1 -0.2

    Current Account Balance (% of GDP) -10.1 -9.9 -5.5 -3.0 0.1

    General Government Balance (% of GDP) -10.7 -9.4 -7.1 -4.3 -3.4

    Primary Government Balance (% of GDP) -4.9 -2.3 -1.9 0.3 1.9

    General Government Debt (% of GDP) 148.3 170.6 162.0 173.0 174.4

    Net Government Debt (% of GDP) 117.2 138.7 N/A N/A N/A Source: National Statistics, Morgan Stanley Research estimates (E)
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Portugal Lower Market Risks, Higher Macro Risks

    Morgan Stanley & Co.International plc Daniele Antonucci

    Key PointsA market return might be facilitated by the upcoming extension

    of the maturities of the official loans, along with a stabilisation

    of the rating, together with ESM/OMT support, once Portugal

    has issued more and across the curve, if needed.

    Economic rebalancing is progressing at a faster pace than

    expected. Thats a good sign. Yet fiscal austerity is weakening

    the real economy to a more substantial extent than envisaged

    earlier. We revise down our GDP forecasts to -3% from -2%.

    Steps to prepare market access likely to continueEuropean policymakers are in the process of debating a

    lengthening of the maturities of the official loans (EFSF and

    EFSM) that Portugal has to repay. The finance ministers hope

    to reach a deal in April, even though the debate is ongoing and

    the details have to be finalised by the Troika. It seems more

    likely that Portugal will get a shorter extension of the terms of

    the loans relative to the concession than Greece was granted

    recently, i.e., a 15-year extension. Yet this would be a positive

    development because it would avoid bottlenecks in repaying

    the loans, thus facilitating a market return. One issue is that

    countries such as Germany, which require parliamentary

    approval in many cases, are looking at whether there are

    solutions that would avoid going back to parliament. The ratingoutlook was raised to stable from negative by S&P, while the

    overall rating was affirmed at BB. An important market driver

    for the eurozone periphery, going forward, is likely to be a

    trough or at least stabilisation of the rating cycle.

    and European policy might help too

    If Portugal were to struggle to fully come back to the market in

    2014 when the financial assistance programme expires, or just

    to facilitate a market return, then one option is to have second,

    bridge, programme, but of a different nature. The current

    bailout package doesnt talk about bond buying just loans.

    But this could perhaps be modified further down the line. From

    the perspective of Portugals funding, that wouldnt actually

    make any difference. Rather than via outright loans, the

    sovereign would continue to cover its funding needs via debt

    issuance that the official sector would purchase (the ESM can

    only buy 50% of the total at issuance). We wouldnt rule out that

    such a situation maybe not right away, but after some time

    might be just enough to create the perception of some kind of

    return to the market, in the hypothetical scenario where

    Portugal were to struggle to return without support. Further

    down the line, this market comeback, even if initially driven

    mainly by the official sector, might lower the hurdle for the ECBto purchase Portuguese bonds as well, especially if private

    investors start playing a role too.

    Exhibit 23

    Portugal Main Macro Forecasts 2010-2014E2010A 2011A 2012E 2013E 2014E

    Real GDP 1.9 -1.6 -3.2 -3.0 0.3

    Final Domestic Demand (ppt contr.) 1.0 -5.6 -7.1 -4.2 -0.9

    Net Exports (ppt contr.) -0.1 4.7 4.0 1.6 0.9

    Inventories (ppt contr.) 0.9 -0.7 -0.1 -0.3 0.3

    Unemployment Rate (% of Labour Force) 10.8 14.2 15.5 17.9 18.6

    Inflation (CPI) 1.4 3.7 2.8 0.6 0.6

    Current Account Balance (% of GDP) -10.0 -6.5 -1.4 -1.3 -0.7

    General Gov't Balance (% of GDP) -9.8 -4.4 -5.1 -5.0 -3.4

    Primary Gov't Balance (% of GDP) -7.0 -0.4 -0.8 -0.6 1.0

    General Gov't Debt (% of GDP) 93.5 108.1 120.9 129.4 131.3Net Government Debt (% of GDP) 70.1 74.8 N/A N/A N/A

    Source: Statistics Portugal, Bank of Portugal, Morgan Stanley Research estimates (E)

    Rebalancing and austerity

    Just like in Spain, economic rebalancing is progressing in

    Portugal too, and faster than expected. This is a positive

    development and, if continued, might well create the conditions

    for exports to provide a bigger cushion to the downturn, and

    eventually to generate somegrowth. Yet the significant fiscal

    tightening that is currently feeding through the economy, along

    with a severe credit crunch, has depressed economic activity to

    a much bigger extent than expected. With such a negative

    carry-over into this year, after the sharp fall in activity in 4Q2012, the chances are that the economy will shrink at a faster

    pace than projected. We revise down our forecasts and now

    see GDP falling by 3% rather than 2% as in our previous

    forecast exercise.

    Exhibit 24

    Economic activity still very weak

    Manufacturing Confidence Indicators










    2005 2006 2007 2008 2009 2010 2011 2012 2013










    Euro area (LHS)

    Italy (LHS)

    Spain (LHS)

    Greece (LHS)

    Portugal (RHS)

    Source: European Commission, Markit, Morgan Stanley Research

  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Ireland Heading for the Exit

    Morgan Stanley & Co.International plc Elga Bartsch

    Key PointsIreland should be the fastest growing economy in the euro area

    in 2013. Growth will be driven by net exports. Domestic

    demand continues to decline.

    Mortgage arrears, which are still on the rise, have become a

    focus as the government aims to address legal hurdles to a

    quick resolution.

    Additional measures to facilitate a smooth exit from the bailout

    programme, such as a loan extension, should support positive

    market sentiment.

    On our upwardly revised, but still cautious forecasts,

    Ireland is the fastest growing economy in the euro area.

    Growth will be largely driven by net exports. Domestic demand

    will continue to contract, but at a slower pace. Consumer

    expenditure will fall further as austerity measures (e.g. the new

    property tax or higher PRSI charges) dent consumers

    purchasing power. On a brighter note, labour market conditions

    are starting to improve. Overall investment spending should

    contract further, despite a sharp rise in inward FDI, as credit

    conditions remain tight for domestic firms and housing remains

    in the doldrums. Domestic demand should bottom this year

    and start to make a small contribution to growth next year.

    Deficit targets will likely be met comfortably in 2013

    thanks to a deficit undershoot in 2012. The 2012 deficit will

    likely be below 8% of GDP, lower than the governments

    estimate of 8.2% of GDP and the troika target of 8.6%. The

    majority of the consolidation measures worth 3.5bn (2.1% of

    GDP) are expenditure cuts. The 2014 deficit should also

    benefit from the promissory note deal with the ECB (see

    Economics and Strategy: Ireland: Comeback Continues),

    provided that the government is not giving in to political

    pressure to use the gains from the IBRC deal to ease some of

    the planned austerity measures.

    Extending public sector pay cuts under another CrokePark agreement: An important step is the extension of the

    public-sector pay agreement known as Croke Park, which was

    scheduled to expire in 2014. Under the new agreement, the

    government aims to save 1bn in public sector pay over a

    three-year period starting from July 1, 2013. Measures include

    pay cuts for employees with salaries of 65,000 and above,

    longer working hours, lower overtime rates, and a reduction in

    pension levies (see Labour Relations Commission Proposals

    for Public Service Agreement,. The agreement still needs to be

    approved by the majority of public sector workers

    Heading for the exit of the bail-out programme: The troikais in talks about additional support to Irelands exit from the

    bailout programme at year-end, e.g. an extension of the

    EFSM/EFSF loans. Whether Ireland will be granted the

    15-year extension remains to be seen though. Similarly, we are

    cautious as to whether Ireland will be able to secure a direct

    bank recapitalization by ESM. A third option to support Ireland

    would be the ECBs OMT programme. In our view, the OMT is

    an effective back-stop, also for Ireland, but will probably not be

    activated for Ireland because it would require an ESM credit

    line, which effectively would imply another bailout programme.

    Focus back on banks, notably the issue of mortgage

    arrears: After the IBRC deal, the focus is shifting to the issue ofmortgage arrears, which seem to hinder a recovery in the

    property market. While arrears of less than 90-days seem to be

    stabilizing, arrears of more than 180-days continue to increase.

    The rise in long-term arrears reflects the lack of a resolution

    regime, which the government is trying to address through

    reforming insolvency legislation in order to allow out-of-court

    settlements between creditors and debtors. The government is

    also aiming to close legal loopholes, which prevent banks from

    repossessing homes. Tracker mortgages, which are seen as a

    drag on bank profitability, are another concern after a plan to

    deal with tracker mortgages by transferring them off bank

    balance sheets into a SPV fell through earlier this year.

    We acknowledge the contribution of Gaura Sengupta

    Exhibit 25

    Ireland Main Macro Forecasts, 2010-14E2010 2011 2012E 2013E 2014E

    Real GDP -0.8 1.4 0.7 1.1 2.4

    Private Consumption 0.6 -2.3 -1.4 -0.4 0.4

    Government Consumption -4.6 -4.3 -3.5 -2.1 -1.1

    Investment Spending -22.6 -12.8 0.6 -0.1 2.2

    Exports 6.2 5.0 3.0 3.3 5.2

    Imports 3.6 -0.3 0.4 2.9 5.1

    Contribution to Growth

    Domestic Demand -4.9 -3.9 -1.2 -0.6 0.3

    Inventories 1.2 0.1 -0.7 0.4 0.4

    Net Foreign Trade 3.0 5.2 2.7 1.3 1.6

    Other Economic Indicators

    Employment -4.1 -1.8 -0.8 0.2 0.4

    Unemployment Rate (%) 13.9 14.7 14.9 14.5 14.3Current Account (% of GDP) 1.0 1.1 5.2 4.0 3.0

    Inflation (YOY)

    Consumer Prices -1.6 1.2 1.9 1.1 1.5

    GDP Deflator -2.2 0.2 2.7 1.3 1.0

    Wages Per Employee -3.2 -0.2 2.1 0.9 0.3

    Unit Labour Costs (Total Economy) -5.7 -2.7 0.6 0.3 -1.6


    Primary Govt. Deficit (% of GDP) -27.7 -10.0 -4.4 -2.4 0.2

    General Govt. Deficit (% of GDP) -30.9 -13.3 -7.7 -7.2 -4.4

    General Govt. Debt (% of GDP) 92.2 106.4 117.1 119.8 117.9 Source: Eurostat, CSO Ireland, Morgan Stanley Research forecasts
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Austria Timid Cyclical Upturn

    Morgan Stanley & Co.International plc Elga Bartsch


    Key PointsAt 0.9% on our forecasts, Austria is growing significantly faster

    than the average EMU country. A gradual improvement in

    quarterly GDP growth supports the recovery.

    The slowdown we expect in euro area demand in 2013 is likely

    to weigh on growth. Some offset might come from growing

    CEE demand though.

    2013 should see the Austrian economy outperforming the

    euro area again. We see Austrian GDP growing significantly

    faster than the average EMU country. That said, we are revising

    our GDP forecast slightly lower amid weaker expected

    economic activity in the euro area. We now expect GDP growth

    to remain unchanged at 0.9% in 2013.

    Investment dynamics to remain subdued in 2013. After

    strong growth in 1Q last year, companies have scaled back on

    their investments in machinery and equipment. Despite

    favourable financing conditions, companies seem to be

    exercising caution. Hence, we are unlikely to see robust growth

    in investment before 2014. That said, we expect a gradual

    quarterly upturn in investment in 2013, as companies are likely

    to ensure the adequacy of the capital stock in anticipation of an

    increase in demand next year. Due to base effects, however,

    investment growth is likely to fall to 1.1% this year from 1.7%

    recorded in 2012.

    Private consumption is likely to pick up somewhat, but

    without a marked fall in uncertainty to boost households

    willingness to buy, private consumption is unlikely to pick up

    sharply. That said, high wage settlements in 2012 and falling

    inflation pressures will provide for a moderate increase in

    consumption. Whats more, although employment growth is

    likely to slow, it is still in positive territory. The small rise in the

    unemployment rate that we expect to see this year is mostlyrelated to an increase in the supply of labour rather than a fall in


    The key downside risk to the Austrian economy in the

    coming year stems from weaker foreign demand. As a small,

    open economy, Austria is more prone to be affected by swings in

    the volume of international trade. While somewhat stronger

    expected import growth coming out of Germany is likely to

    support exports, the marked slowdown in economic activity in

    the rest of the euro area, especially in the other key Austrian

    export markets of Italy and France, is unlikely to leave theAustrian economy unscathed. Some of the relief will, however,

    still come from the CEE region. The significance of the CEE

    region to the Austrian export market has doubled in the last 20

    years to around 18%. While our CEE economists remain

    generally bearish on growth in 2013, they still expect the region

    to grow at a faster pace than the euro area.

    Budget deficit improving, but risks remain. The increase in

    budget deficit close to the crucial 3.0% mark last year was

    mainly due to large transfers to partially nationalised banks.

    Despite a weak growth environment, implemented spending and

    revenue measures (raising of social security contributions,

    property tax, partial pay freezes, pension increases below theinflation rate) as well as substantial increase in wages and larger

    corporate operating surpluses, are likely to help reduce the

    budget deficit significantly in 2013. On the other hand, likely

    additional support to the banking sector should have an adverse


    Exhibit 26

    Austria Macro Forecasts 2010-2014E2010A 2011A 2012A 2013E 2014E

    Real GDP 2.1 2.7 0.8 0.9 1.5

    Private Consumption 1.7 0.7 0.2 0.6 1.3

    Gross Fixed Investment 0.8 7.3 1.7 1.1 2.3

    Exports 8.7 7.2 2.0 2.5 4.8

    Imports 8.8 7.2 1.2 2.3 4.9

    Contribution to GDP Growth

    Final Domestic Demand 1.1 1.8 0.4 0.6 1.2

    Inventories -0.1 -0.1 0.2 0.0 0.1

    Net Exports 0.4 0.4 0.5 0.3 0.2

    Unemployment Rate (% of LF) 4.4 4.1 4.5 4.8 4.6

    Consumer Prices 1.7 3.6 2.6 2.2 2.1

    Current Account, EUR bn 9.7 1.7 4.5 4.3 4.6

    Current Account (%of GDP) 3.4 0.6 1.4 1.3 1.4

    General Government Balance (% of GDP) -4.5 -2.5 -2.9 -2.4 -2.0

    General Government Debt (% of GDP) 72.0 72.4 74.1 75.4 75.2 Source: Statistics Austria, BoA, Morgan Stanley Research Estimates (E)

    Exhibit 27

    Export Trend Towards CEE, Away from Euro Area

    Austria Exports (% of total) Euro area vs Central Eastern Europe












    1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013








    Euro Area ex SL, SK (LHS)


    Source: IMF, Morgan Stanley Research
  • 7/29/2019 Jarn predikce rstu Evropsk ekonomiky, snen odhadu (vtah z dokumentu v AJ)


    M O R G A N S T A N L E Y R E S E A R C H

    March 13, 2013

    European Economics

    Finland More Stagnation

    Morgan Stanley & Co.International plc Elga Bartsch

    Key PointsOn our downwardly revised forecasts, we expect Finnish GDP

    growth to come to a standstill in 2013. Incoming data support

    our concerns about four sources of fatigue economic, export,

    consumer and bailout weighing on Finland.

    We expect Finnish GDP growth to come to a standstill in

    2013, on the back of declining domestic demand and net

    exports. Consumer expenditure is expected to be subdued due

    to austerity measures, more moderate wage growth and

    weaker labour market conditions. Investment is expected to

    contract due to low expectations of future growth levels and

    weak housing activity, which will affect construction. Exports

    are expected to be impacted by the ongoing restructuring in the

    electronics and forestry industries.

    Growth will be damped by four sources of fundamental

    fatigue economic, exports, consumer and, finally,

    bailout. GDP in level terms is yet to recover to 2008 levels and

    is not expected to reach those levels over our forecast horizon.

    This prolonged period of weak growth will result in economic

    fatigue, characterised by weak labour market conditions and

    difficulty in improving fiscal balance. Labour market conditions

    are expected to weaken further in 2013 as permanent layoffs

    become more common than temporary layoffs. The impact of

    economic fatigue on fiscal balance was evident in 2012, when

    the deficit worsened as weak growth impacted tax revenues, in

    particular corporate tax revenues. Deficit levels are expected to

    improve in 2013 on the back of austerity measures aimed at

    strengthening central government finances.

    The second source of fatigue is export fatigue: Finland has

    been losing market share in global trade for many years. The

    cause can be traced to the ongoing restructuring on the

    electronics and forestry industries. This is despite the fact that

    structural factors have been largely supportive (see Bank of

    Finland Bulletin 3/2012). Part of the loss in competitivenesscan be traced to the Nokias performance. At its heights Nokia

    accounted for 4% of Finnish GDP and more than 20% of

    exports (see Nokia and Finland in a Sea of Changeby Jyrki

    Ali-Yrkk (Ed.) of Research Institute of the Finnish Economy,

    2010). Nokias declining performance is expected to impact the

    economy through multiple channels - damping export growth,

    lower tax revenue, possible job cuts and reduced R&D

    expenditure (see Nordic Economics: Bright Stars on European

    Skies, January 23, 2013).

    Consumer fatigue is also expected to take a toll on Finnishgrowth. Consumption expenditure is expected to be impacted

    by the ongoing austerity measures, which will make real

    disposable income grow slowly. The measures include a VAT

    rate hike and non-adjustment of income tax bracket for inflation.

    Apart from this, the rise in wages is expected to be more

    moderate due to the collective wage agreement. Rising