fearfulsymmetry the chart pack jan 2014

8/13/2019 FearfulSymmetry the Chart Pack Jan 2014

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fearfulsymmetry

The

chartpack

January 14


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Executive summary

2


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India: real growth and economy wide prices

2

34

5

6

78

9

10

11

12

2 3 4 5 6 7 8 9 10 11 12

Sources: WestpacEconomics, CEIC.

GDP IPD

Real GDP

Sep 2012

Dec 2012

Mar-2013

Jun-2013

Sep-13

3


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5

79

11

13

1517

19

21

23

25

80

100

120

140

160

180

200

220

Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14

%yrindex

D&B business confidence (lhs)

Nominal GDP (lhs)

Sources: CEIC, Westpac Economics.* Smoothed.

Indian business confidence & nominal GDP

4


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fearful symmetry

-20

-10

0

10

2030

40

50

60

-10

-5

0

5

1015

20

25

30

Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

%yr%yrTotal (lhs)Infrastructure industries (lhs)

Capital goods (rhs)

Consumer durables (lhs)

Sources: CEIC, Westpac Economics. 3mma.

Indian industrial output

5


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-20

-10

0

10

20

30

-20

-10

0

10

20

30


%yr%yr

Infrastructure index Steel Power


Infrastructure related industries: output

6


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-20

-10

0

10

2030

40

50

60

-20

-10

0

10

2030

40

50

60


%yr%yrInfrastructure index

Steel

Coal

Cement

Power


Infrastructure related industries: output

7


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-30

-20-10

0

10

2030

40

50

60

70

-30

-20-10

0

10

2030

40

50

60

70


%yr%yr

Total IP

Capital goodsConsumer durables

Non-oil imports

Sources: CEIC, WestpacEconomics. 3mma.

Indian industrial output & non-oil imports

8


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-75

-50

-25

0

25

50

75

100

125

150

-30

-20

-10

0

10

20

30

40

50

60

Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14

%yr%yr

Total (lhs)

Passenger cars (lhs, 13%)

Two wheelers (lhs, 75%)Exports, total (lhs, 13%)

Commercial vehicles (rhs, 4%)

Sources: CEIC, Westpac Economics.Rounded share of unit sales in parentheses.Other (principally 3 wheelers) accounts for 8%.Note exports and other sales segments overlap.

Autos sales by type

9


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Urban & rural household consumption shares

24

1614

9

21 19 21

16

8 8 8 610 11 12

10

37

46 45

59

0

10

20

30

40

50

60

0

10

20

30

40

50

60

Rural 1994 Rural 2010 Urban 1994 Urban 2010

%%Cereals Proteins & oilsFruit & veg Other foodNon food

10


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0.7

0.8

0.9

1.0

1.11.2

1.3

1.4

1.5

35

40

45

50

5560

65

70

75

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

ratioindex

Production (lhs)

Headline (lhs)

Orders to inventories (rhs) Sources: Markit.

Indias manufacturing PMI

11


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0.7

0.8

0.9

1.0

1.11.2

1.3

1.4

1.5

40

45

50

55

60


ratioindex

Finished goods inventories

Order backlog

Orders to inventories (rhs)

Sources: Markit.

Indias manufacturing PMI: selected detail

12


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40

45

50

55

60

65

40

45

50

55

60

65

Dec-05 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13

indexindex

Business activity

New businessSources: CEIC, Markit.

India: services sector PMI

13


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47

49

51

53

55

57

59

47

49

51

53

55

57

59


indexindexManufacturing

Services

Composite

Sources: CEIC, Markit.Job indexes from the PMI surveys.

Indias formal labour market

14


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50

100

150

200

250

300

50

100

150

200

250

300

Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13

indexindexAll India Delhi Bangalore

Kolkata Mumbai

Sources: CEIC, RBI.Indices based at 2009Q4.

Indian residential property prices

15


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-4

0

4

8

12

16

20

-4

0

4

8

12

16

20


%yr%yrGDP deflator

Real secondary output

Real non-farm GDP

Industrial workers CPI

WPI

Sources: CEIC, Westpac Economics.

Various price measures & economic growth

17

f f

f f


18/76

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Indian activity: farm, non-farm & total

0

2

4

6

8

10

12

14

-9

-6

-3

0

3

6

9

12

Mar-99 Mar-02 Mar-05 Mar-08 Mar-11 Mar-14

% annual avg% annual avg

Farm GDP (lhs)

Non-farm GDP (rhs)

Total GDP (rhs)

Sources: CEIC,Westpac Economics.

18

f f

f f


19/76


Indian GDP: real & nominal estimates

-5

0

5

10

15

20

25

-5

0

5

10

15

20

25

Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13

%%Deflator %yr

Real %yr

Nominal %yr


19

f f l


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-5

0

5

10

15

20

-5

0

5

10

15

20


%yr%yrConstruction

Trade, transport & communications

Manufacturing

Finance, property & business services


Indian GDP by industry

20

f f l


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Contributions to growth: analytical split

-4

-2

0

2

46

8

10

12

-4

-2

0

2

46

8

10

12


ppt

OtherInterest rate sensitivePrimary

Sources: CEIC, Westpac.Contribution to year-ended rate.

ppt

21

f f l


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Contributions to growth in value added

-2

0

2

4

6

8

10

12

-2

0

2

4

6

8

10

12

Jun-05 Jun-07 Jun-09 Jun-11 Jun-13

ppt Other services Finance, property & business servicesTrade, transport & communications Construction & utilities

Manufacturing Primary

Sources: CEIC, Westpac.Contribution to year-ended rate.

ppt

22

f f l


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-10

-5

0

5

10

15

20

25

-3

0

3

6

9

12

15


%yr%yr Private consumption (lhs)Public consumption* (rhs)

Fixed investment (rhs)

Non-farm GDP (lhs)

Sources: CEIC, Westpac Economics.* Smoothed.

Indian GDP by expenditure

23


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f f l t


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Contributions to monthly WPI inflation

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0


ppt

OtherEnergyFood- primary

Food - manufNon-food manufTotal

Sources: CEIC, Westpac.3 month averages.

ppt

25

f f l t


26/76

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-10

-5

0

5

10

15

20

25

-10

-5

0

5

10

15

20

25

Apr-05 Apr-07 Apr-09 Apr-11 Apr-13

%yr%yr

Non-food manufacturesPrimary articles - foodHeadlineManufactures

Sources: CEIC, Westpac

Indian wholesale inflation

26

f f l t


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-27

-18

-9

0

918

27

36

45

-9

-6

-3

0

3

6

9

12

1518


%6mth ann.%6mth ann.ETMs (lhs)Non-food manufacturing (lhs)Protein basket (rhs)

Sources: CEIC, Westpac Economics.ETMs are elaborately transformed manufactures.

Wholesale price inflation: various measures

27

f f l t


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-9

-6

-3

0

3

6

9

12

15

18

-9

-6

-3

0

3

6

9

12

15

18


%chg%chg

%yr

%3mth ann.%6mth ann. Sources: CEIC, Westpac Economics.

Wholesale inflation: non-food manufactures

28

f f l t


29/76

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-9

-6

-3

0

3

6

9

12

1518

-9

-6

-3

0

3

6

9

12

1518


%chg%chgETMs %yr Non-food manuf. %yr

ETMs 6mth ann. Non-food manuf. 6mth ann.


Wholesale price inflation: selected measures

29

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-2

0

2

4

6

8

10

-10

0

10

20

30

40

50


%chg%chgProtein basket %yr (lhs) Protein basket %6mth ann. (lhs)ETMs %yr (rhs) ETMs %6mth ann. (rhs)


Demand side inflation: protein & ETMs

30

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-10

0

10

20

30

40

50

-10

0

10

20

30

40

50


%chg%chg%yr

%3mth annualised

%6mth annualised


Indian inflation: protein rich food basket

31

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-30

-15

0

15

30

45

60

-20

-10

0

10

20

30

40


Net bal.Net bal.

Selling prices (RBI, lhs)

Capacity utilisation (RBI, lhs)

Profit margins (RBI, lhs)

Selling prices (Dun & Bradstreet, rhs) Sources: CEIC, Westpac Economics.

Inflation indicators from the business surveys

32

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-40

-20

0

20

40

60

80

100

-40

-20

0

20

40

60

80

100


%yr%yr

Exports

Oil imports

Non-oil imports

Sources: CEIC, Westpac.Underlying data in USDs, smoothed.

Indias foreign trade

33

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-40

-20

0

20

40

60

80

100

120

-40

-20

0

20

40

60

80

100

120


%yr%yr

Total goodsSoftware servicesEngineering goods

Sources: CEIC, Westpac.Underlying data in USDs.

Indian export growth

34

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-50

-25

0

25

50

75

100

-50

-25

0

25

50

75

100


%yr%yr

Fateh

Brent


Oil prices in INR terms

35

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-30

-20-10

0

10

20

30

40

50

60

7080

-30

-20-10

0

10

20

30

40

50

60

7080


%yr%yr

USD

INR


The gold price in INR and USD terms

36

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Indias goods & services trade balance

-75

-60

-45

-30

-15

0

15

30

45

-75

-60

-45

-30

-15

0

15

30

45

Dec-02 Dec-05 Dec-08 Dec-11

USDbnUSDbn

Other invisibles

Services

Oil

Other merchandiseGold

Sources: CEIC, Westpac Economics

37

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Decomposing changes in the real rupee

-30

-25

-20

-15

-10

-50

5

10

1520

-30

-25

-20

-15

-10

-50

5

10

1520


pptppt

Relative price level

Nominal exchange rate

Real exchange rate

USD/INRSource: BIS, Westpac.Contributions to 12 month changes.

38

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90

100

110

120

130

140

150

160

90

100

110

120

130

140

150

160

Jan-11 Jul-11 Mar-12 Sep-12 May-13 Nov-13

indexindex

USD JPY

EUR GBP

Sources: CEIC, Westpac Economics. Indices based at January 1, 2011.

Foreign currency strengthens

The rupee against the major currencies

39

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5

6

7

8

9

10

11

12

90

100

110

120

130

140

150

160

Jan-11 Jul-11 Mar-12 Sep-12 May-13 Nov-13

%paindexINR per USD (lhs)

Overnight mid (rhs)

3mth mid (rhs)

Sources: CEIC, Westpac Economics.USD/INR index based at January 1, 2011.

The rupee and Mumbai interbank rates

40

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41

USD/INR versus stagflation proxy*

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.338

42

46

50

54

58

62

66

70

Apr-06 Jul-07 Oct-08 Jan-10 Apr-11 Jul-12 Oct-13

USD/INR (lhs)

PMI based stagflation* (rhs, inverted)

ratio

Sources: Westpac,Bloomberg, Markit

INR

* Manufacturing PMI: Productionindex over output prices index

41

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India

Indonesia

China

Thailand

Malaysia

Philippines21

14

48

58

41

31Debt

Equity

Total portfolio

FX reserves

Gross portfolio liabilities & FX reserves

Sources: CEIC,IMF, Westpac.

% of GDP

42

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Investment share of GDP: then and now

10

15

20

25

30

35

40

45

50

India Indonesia Korea Taiwan Thailand Malaysia Philippines Singapore Hong Kong China Japan

1996

2012

Sources: IMF,Westpac Economics.

Investment % GDP

43

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Current account balances: then and now

-10

-5

0

5

10

15

20

India Indonesia Korea Taiwan Thailand Malaysia Philippines Singapore Hong Kong China Japan

1996

2012

Sources: IMF, Westpac Economics.CA % GDP

44

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Net foreign portfolio inflows by type: weekly

-150

-100

-50

0

50

100

150

200

250

-150

-100

-50

0

50

100

150

200

250

Jan-12 Jun-12 Dec-12 May-13 Nov-13

RbnRbn

Net debt Net equity Total

Sources: CEIC, Westpac Economics.Rolling weekly totals.

Rise indebtquotas

LTRO #2

MukherjeesBudget

RBI cutsby 50bps

MukherjeewinsPresidentialElection

P. Chidambaramnew FinanceMinister

Big BangFriday

KelkarCommitteeReport

ECB OMTsannounced

QE3announced

ObamaRe-election &Fiscal cliffconcerns

Januaryrisk rally

RBI cutBy 25bps

P. Chidam-baramsBudget

FDI lawpassed

RBI cutBy 25bps

QETaper

rumours

RBI INR

stabilitymeasures

Rajannew RBI

Governor

NoTaper,thenRBI

hike(s)

Actualtaper

45

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Cumulative net foreign inflows by type

0

1000

2000

3000

4000

5000

6000

7000

0

1000

2000

3000

4000

5000

6000

7000


RbnRbn

Net equity

Net debt


46

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Non-resident holdings of EM government debt*

0

10

20

30

40

5060

70

80

90100

ARP BRL BULG CLP KRW COL EGY HUF INR IDR JOR KZK LAT LITH MYR MEX MOR PER POL ROM RUS ZAR THB TKL UKR

% of totalSources: IMF, Westpac Economics.*General government debt outstanding.

47

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Net foreign portfolio inflows by type

-500

-400

-300

-200

-100

0

100

200

300400

-500

-400

-300

-200

-100

0

100

200

300400


RbnRbn

Net debt

Net equity

Total


48

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f f y y

30323436384042

30323436384042

%GDP%GDP

Investment Savings Savings plus net FDI


Investment, savings, FDI & the twin deficits

-10-8-6

-4-2024

-10-8-6

-4-2024

Mar-05 Mar-07 Mar-09 Mar-11 Mar-13

Current Account Capital & financial account inverted

Revenue deficit

49

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f f y y

Foreign capital inflow & domestic investment

-3

0

3

6

9

-20

0

20

40

60

Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12 Jun-14

%GDP%yrOther (mainly loans)

Portfolio investment

Direct investment

Capital goods output (lhs)

Basic balance

Sources: CEIC, Westpac Economics.Four quarter sums ex capital goods output.

Global boom

QE era

50

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f f y y

Foreign bank claims on India

0

50

100

150

200

250

300

350

-40

-20

0

20

40

60

80

100

120

Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12

$USbn

US (22%)

UK (25%)

Japan (6%)

Europe (47%)

Total outstanding (lhs)Sources: BIS, Westpac.Shares of total outstanding as ofDec-2010 in parentheses.

$USbn

Change overthe year (rhs)

51

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f f y y

Foreign bank claims on India

-40

-30

-20

-10

0

1020

30

40

5060

-40

-30

-20

-10

0

1020

30

40

5060


$USbn

US (22%)

UK (25%)

Japan (6%)

Europe (47%)

Total

Sources: BIS, Westpac.Shares of total outstanding as ofDec-2010 in parentheses.

$USbn

Change over

6 months

52

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f f y y

Foreign bank claims: South & South-east Asia

0

20

40

60

80

100120

140

160

180200

0

20

40

60

80

100120

140

160

180200


index

Malaysia Thailand

Philippines India

Indonesia

Sources: BIS, Westpac.Total outstanding indexed to Sep-08.

index

53

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f f y y

Primary industry,3.3

Construction andinfrastructure, 15.8

IT manuf, 3.5

Pharma manuf, 7.0

Other manuf, 22.0

Financial services,4.2

Communicationservices, 9.4

Other non-financialservices, 14.0

Real estate, 4.4

Other, 16.3

Sources: CEIC, Westpac Economics.Sum of inflows from 2010 and 2011

Foreign direct investment inflows by sector

54

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f f y y

50

55

60

65

0

50

100

150

200

250

300

350

400450

Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13

ratioRbn

Loans and advances from the RBI (lhs)

Credit-deposit ratio (rhs)


RBI credit to the banking system

55

fearful symmetry


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f f y y

5

6

7

8

9

10

11

0

50

100

150

200

250

300

350

400450

Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13

%paRbn

Loans and advances from the RBI (lhs)

Marginal standby facility rate (rhs)


RBI credit to banks: volume and price

56

fearful symmetry


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f f y y

-2

0

2

4

6

8

10

12

44

48

52

56

60

64


%pa/yrindex

Rate corridor (rhs)

Manufacturing PMI (lhs)WPI (rhs)

Core inflation (rhs)


Indian monetary policy, activity and inflation

57

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f f y y

Commercial credit and nominal activity

0

10

20

30

10

20

30

40


%yr%yr

Non-food commercialcredit (lhs)

Nominal GDP (rhs)


58

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f f y y

-10

0

10

20

30

40

-10

0

10

20

30

40


%yr%yr

Loan to deposit growth differentialResident depositsPrivate credit


Bank liquidity and credit supply

59

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f f

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35


%yr%yr

M1 M3Credit DXRR*

Sources: CEIC, Westpac.* Deposits less CRR & SLR.

Indian money and credit aggregates

60

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95

100

105

110

115

120

125

5

10

15

20

25

30

35


%%yr

DXRR* (lhs)

Commercial credit (lhs)Loan to deposit ratio^ (rhs)

Sources: CEIC, Westpac.* Resident deposits less the CRR and SLR.^ Stock of commercial credit to stock of DXRR.

Indian bank liquidity and commercial credit

61

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-50

-25

0

25

50

75

100

125

150

-50

-25

0

25

50

75

100

125

150


%yr%yr

ConstructionInfrastructureConsumer durablesHousing

Sources: CEIC, Westpac.

Indian bank loans by sector & purpose

62

fearful symmetry


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-30

0

30

60

90

120

150

-30

0

30

60

90

120

150


%yr%yr

Total Power Telco

Road Other

Sources: CEIC, Westpac.

Indian bank loans to infrastructure

63

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Central government revenues & outlays

-20-10010203040

-20-10

010203040

%yr%yr

Sources: CEIC, Westpac Economics. Rolling twelve months for historical data, budget estimate at outset of the year in question.

Tax

revenues

-10

010

20

30

40

-10

010

20

30

40


Actual

Budgeted

Expenditure

64

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-10

0

10

20

30

40

-10

0

10

20

30

40


%yr%yr

TotalPlanNon-plan

Sources: CEIC, Westpac Economics. Rolling twelve months.

Central government expenditure growth

65

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-10

0

10

20

30

40

-10

0

10

20

30

40


%yr%yr

Actual Non-Plan spending

Budgeted Non-Plan spending

Sources: CEIC, Westpac Economics. Rolling twelve months forhistorical data, budget estimate at outset of the year in question.

Non-Plan outlays: actual & budget

66

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-10

0

10

20

30

40

-10

0

10

20

30

40


%yr%yr

Actual Plan spending

Budgeted Plan spending

Sources: CEIC, Westpac Economics. Rolling twelve months forhistorical data, budget estimate at outset of the year in question.

Plan outlays: actual & budget

67

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-45

-30

-15

0

15

3045

60

75

90105

-45

-30

-15

0

15

3045

60

75

90105


%yr%yr

Fateh oil price, INR terms

Budgeted Subsidy spending


The subsidy bill and the oil price

68

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Real net fixed capital stock growth by decade

0

3

6

9

12

Total Public Private firms Households

1981-91 1991-01 2001-11

CAGR %

Sources: Westpac, CEIC.

69

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70/76

Capital efficiency in India and China

2

3

4

5

6

7

8

2

3

4

5

6

7

8Mar-05 Mar-07 Mar-09 Mar-11 Mar-13

China

India

ICOR* ICOR*

Sources: CEIC, Westpac. * Incremental capital to output ratio: GCF/GDP / GDP growth rate.A falling ratio indicates greater efficiency, a rising ratio lesser efficiency. In this chart, as theseries is inverted, a rising curve is an improvement in efficiency, and vice versa.

70

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71/76

India: investment and its efficiency

2

4

6

8

10

12

32 34 36 38 40 42

Sources: WestpacEconomics, CEIC.

ICOR

Gross investment share

Rising share,stable highefficiency:Golden years

GFC downswing& rebound

Recovery &stimulusoverhang

2012/13:

Annus horribilis:Less investment& less efficient

More investment,less efficient,in CY2013

71

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72/76

Is there a threshold inflation effect on growth?

2

3

4

5

6

78

9

10

1112

4 5 6 7 8 9 10 11

Sources: WestpacEconomics, CEIC.* Quarterly sample,Jun-97 to Mar-12

GDP IPD

Real GDP

Empirically estimated

Growth-Inflation Curve*

Black triangles

are actuals

for the period

Sep-09 to Sep-12

Khaki circles

are actuals

for the period

Mar-04 to Dec-07

Dec-12

Mar-13

Jun-13

Sep-13

72

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73/76

The 4 Cs: crime, courts, corruption, contracts

27 25

42

31

56

34

18

25

41

20

12

22

0

10

20

30

40

50

60

0

10

20

30

40

50

60

China India Indonesia

%%

Corruption* Contracts^

Courts* Crime*

Source: World Bank. * Share of managers nominating as aconstraint on business. Courts refers to confidence in courtsupholding property rights. ^ Number of procedures to enforcea contract.

73

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74/76

Income level per capita & its distribution

20

30

40

50

60

70

0 10 20 30 40 50 60

Sources: WestpacEconomics, WDI

Gini index

PPP GDPper head

China

US

Brazil

SouthAfrica

WealthyOECD

India

Russia

Poland

Chile

Mexico

Malaysia

Thai

Colombia

Indon.

74

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75/76

The key points reiterated

75

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f

f

y y

i l i


76/76

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fearfulsymmetry the chart pack jan 2014

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