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Thursday, June 14, 2018

Economic Facts of Week: US 2017 Balance of Payments surplus with EU at $14bn- EU says it had US surplus of $170bn with US

Figure 1 above, shows that the US current account/ Balance of Payments with Europe has been approximately balanced since 2008 and has been in small surplus since 2009. It is the result of a substantial increase of the net income of companies (balance of primary income) and the surplus in trade in services with the EU. These gains are more than sufficient to outweigh the trade in goods deficit, and ultimately lead to a positive bilateral current account from the perspective of the US. Source: ifo Institute based on data from the US Bureau of Economic Analysis.

In Ireland we are familiar with distorted data resulting from massive tax avoidance and Eurostat, the European Union's statistics office also has a big difference in estimates of the Balance of Payments/current account balance with the US that is also related to the earnings of American companies.

The head of the ifo Center for International Economics at the ifo institute for economic research in Munich, Prof Gabriel Felbermayr, has urged Europeans to strive for order in their current account statistics with the US. “The US statistics on its current account with the EU differ significantly from the comparable European statistics”, he said, basing his comments on an article he co-authored for the EconPol Europe research network. “The differences go so far that the US has a current account surplus of $14bn with the EU (about €11.6bn) for 2017, while the EU posts a European surplus of €170bn in 2017. Something is wrong here, and most likely on the European side, unfortunately.”

Felbermayr concluded: “All in all, the analysis shows that the EU has a very good negotiating position with the US, because when taking an overall view of transatlantic trade, there is certainly no evidence of “unfair trade practices”. The EU thus has every reason to act with self-confidence. This also includes targeting America’s surpluses in trade in services when considering – hopefully unnecessary retaliatory – measures.”

European data are “contradictory and incomplete,” Felbermayr added. “Even when asked, Eurostat is unable to explain how it derives its balance of payments data with the US, nor is it willing to publish details for the 28 EU member states. In turn, the European Central Bank (ECB), which is actually responsible for collecting these data, is unable to show a bilateral current account with the US because there is no subaccount, the data collection for which is too complicated. But precisely this account is crucial: in the corresponding US account, $83bn is booked under “income from portfolio investment”. So if the relevant ECB data is lacking, how does Eurostat arrive at its results? And who benefits from hiding the $83bn that are crucial to whether the US has a surplus or deficit vis-à-vis the EU?

"The US makes its investment profits in very few EU member states", according to co-author Martin Braml, "and this is largely for tax reasons. Especially Ireland and the Netherlands stand out here. With the Netherlands, the US generates as much as 63% of its total primary income surplus of $106bn.”

"When asked, the Bundesbank was able to report all bilateral balance of payments positions of the Federal Republic of Germany with the United States”, Felbermayr noted. "The Bundesbank data also tend to agree with the American data. As long as the EU is unable to provide consistent data on economic relations with the US, recommendations for possible retaliatory action can only be insufficient."

Germany had 159 country trade surpluses in 2017; EU world’s top exporter - see also data on tariffs.

"There are good reasons to trust the US data. In the US, there is a uniform, statistical data-collection framework, whereas data in the EU are calculated from of 28 sources, some of which are incomplete. Also, in the current trade dispute with the EU, the US is not interested in showing a balanced current account, while the EU has a tradition of emphasising the benefits of surpluses."

Policy Brief

Eight of them are in Asia: the Yangtze; Indus; Yellow; Hai He; Ganges; Pearl; Amur; Mekong; and two in Africa – the Nile and the Niger.

90% of plastic polluting our oceans comes from just 10 rivers

The IMF says Japan is a leader in robot production and industrial use. The country exported some $1.6 billion worth of industrial robots in 2016—more than the next five biggest exporters (Germany, France, Italy, United States, South Korea) combined. Japan is also one of the most robot-integrated economies in the world in terms of “robot density”—measured as the number of robots relative to humans in manufacturing and industry. Japan led the world in this measure until 2009, when Korea’s use of industrial robots surged and Japan’s industrial production increasingly moved abroad.

Robots to help Europe's ageing economies to boost economic growth

Largest share of young people (aged 18-24) neither in education nor employment in Italy, lowest in the Netherlands

Last year, one in four young people aged 18-24 was neither in employment nor in education or training in Italy (25.7%) and about 1 in 5 in Cyprus (22.7%), Greece (21.4%), Croatia (20.2%), Romania (19.3%) and Bulgaria (18.6%). A NEET rate above 15% was also registered in Spain (17.1%), followed by France (15.6%) and Slovakia (15.3%).

In contrast, the lowest proportion of NEETs aged 18-24 was recorded in the Netherlands (5.3%), ahead of Slovenia (8.0%), Austria (8.1%), Luxembourg and Sweden (both 8.2%), the Czech Republic (8.3%), Malta (8.5%), Germany (8.6%) and Denmark (9.2%).

At EU level, nearly 5.5 million young persons aged 18-24 (14.3%) were in 2017 neither in employment nor in education or training. This is the equivalent of the total populations of Slovakia or Finland.

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