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23-11-2023, 03:40 PM
#211
Originally Posted by beacon
(exports – imports) = Trade Surplus
So, GDP = private consumption + gross private investment + government investment + government spending + Trade Surplus
Ceteris paribus, GDP up (=economy growing) if Trade Surplus up, OR Trade Deficit (opposite of Trade Surplus) DOWN
But need to consider how much of those imports end up as Inventory at end of period as change in Inventories is a component of GDP
Last edited by winner69; 23-11-2023 at 03:47 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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23-11-2023, 04:55 PM
#212
Originally Posted by winner69
But need to consider how much of those imports end up as Inventory at end of period as change in Inventories is a component of GDP
Ahh... thanks for pointing that out Winner69.
The relationship between imports and GDP is not always straightforward. For example, if imports decrease because of a decrease in consumer demand, as I think is happening in NZ transitorily, then GDP COULD decrease as well.
The relationship between imports and GDP is, however, complex and depends on various factors. When imports decrease, it does not necessarily mean that GDP will decrease. It could lead to an increase in GDP if the other components of GDP increase.
The change in inventories is a component of GDP, but it is only one of the components. The other components, as you said earlier in the GDP formula, are personal consumption expenditures, gross private domestic investment, and Govt. consumption expenditures and Govt. gross investment.
The value of imports is actually subtracted from the other components of GDP, not exports. Therefore, if imports decrease, the value of the other components of GDP will increase, which COULD lead to an increase in GDP.
Last edited by beacon; 23-11-2023 at 05:05 PM.
Reason: Added "Transitorily"
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24-11-2023, 08:42 AM
#213
Originally Posted by beacon
Ahh... thanks for pointing that out Winner69.
The relationship between imports and GDP is not always straightforward. For example, if imports decrease because of a decrease in consumer demand, as I think is happening in NZ transitorily, then GDP COULD decrease as well.
The relationship between imports and GDP is, however, complex and depends on various factors. When imports decrease, it does not necessarily mean that GDP will decrease. It could lead to an increase in GDP if the other components of GDP increase.
The change in inventories is a component of GDP, but it is only one of the components. The other components, as you said earlier in the GDP formula, are personal consumption expenditures, gross private domestic investment, and Govt. consumption expenditures and Govt. gross investment.
The value of imports is actually subtracted from the other components of GDP, not exports. Therefore, if imports decrease, the value of the other components of GDP will increase, which COULD lead to an increase in GDP.
I would suggest when BOTH imports & exports decrease, unless it's an anomaly in reporting, that GDP is decreasing and perhaps quite considerably.
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24-11-2023, 09:10 AM
#214
Where is the puck going to be?
Originally Posted by Daytr
I would suggest when BOTH imports & exports decrease, unless it's an anomaly in reporting, that GDP is decreasing ...
Agree, but they are still lagging indicators. NZD price already reflects the bad. It was a long night, and dawn is here. Yet, we are still way below 88c.
Confidence is a (one of) leading indicator(s). NZ directors a little less pessimistic on the economy than last year...
https://businessdesk.co.nz/article/e...paign=nzh-home
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24-11-2023, 10:11 AM
#215
Unfortunately, many folk, including most politicians (ex finance minister Robertson, being a classic example), journalists and even a few economists (the NZCTU one being a prime example) don't REALLY understand all things "GDP" related. Many folk will base their thinking, and hence narrative, around the false premise that GDP is THE measure of the prosperity of the country's citizens.
As clearly shown over recent years, whilst the State continues to enlarge its presence in the country, spreading its marauding tentacles wider & deeper (excessive Govt. expenditure, borrowing etc), this only distorts the GDP numbers printed, for the short/medium-term. But of course the Sugar Hits can't & won't continue infinitum - A-la Argentina.
As is often the case with all things "economic performance" related , the devil is in the detail. Knowing the general methodology for how the country's GDP is determined is relatively straightforward. Understanding, actually, what & how the various components of the formula get measured, and how they truly interrelate from a 'cause & effect' perspective is way beyond most folks' comprehension.
Additionally, many folk just assume that the methodology for GDP calculation is commonly agreed too & hence applied consistently across the OECD and beyond. Not so. If 'commentators' & politicians espouse a certain narrative when benchmarking NZ inc against other countries (e.g. "we are doing so much better than most other countries"), we could possibly be a tad reticent at swallowing that hook, line & sinker.
So yes, relative to other currencies, over the next few months & years the NZD may go up. It also may go down, or simply consolidate at current levels.
But on its own, sadly, the trajectory has been, and remains, very clear.
Last edited by FTG; 24-11-2023 at 10:19 AM.
Success is a journey AND a destination!
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24-11-2023, 02:59 PM
#216
Originally Posted by beacon
Agree, but they are still lagging indicators. NZD price already reflects the bad. It was a long night, and dawn is here. Yet, we are still way below 88c.
Confidence is a (one of) leading indicator(s). NZ directors a little less pessimistic on the economy than last year...
https://businessdesk.co.nz/article/e...paign=nzh-home
How are they lagging indicators?
Or do you mean the reporting is lagging I.e it's for the 3rd quarter.
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24-11-2023, 03:47 PM
#217
New coalition agreement seen as hawkish ….that might help nzd
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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24-11-2023, 06:13 PM
#218
Originally Posted by Daytr
How are they lagging indicators?
Or do you mean the reporting is lagging I.e it's for the 3rd quarter.
yep, rear view mirror
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24-11-2023, 06:46 PM
#219
Originally Posted by beacon
yep, rear view mirror
So do you think those numbers are improving this quarter?
And if so why?
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24-11-2023, 08:36 PM
#220
Some experts say US rates have peaked. Rising NZD will reduce import cost and our fuel cost. [QUOTE=winner69;1030742]New coalition agreement seen as hawkish ….that might help nzd[/QUOTE]
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