Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
News release no. 3/2017 2017.03.17 Iceland Leading Indicator – Growth outlook still strong The Iceland Composite Leading Indicator (CLI) rose by 0.1 per cent in February. However, there were some downward revisions for the last three months. The CLI still indicates growth above long term trend. Three of the six components rise on the previous month with the largest impact being due to the increase of the value of fish catches and the increase in tourist arrivals. All components are adjusted for seasonality and long term trend. The long-term trend of some important CLI components is still strong. The main risk factors continue to include some external factors mainly in relation to the geopolitical situation. Turning points of the CLI tend to precede turning points in economic activity relative to trend by approximately six months. Economic activity is measured by Gross Domestic Product (GDP) published by the Statistical Bureau of Iceland. The calculation of Analytica’s CLI is based on methodology adopted by the OECD. Chart 1. GDP and Analytica’s CLI – Trend Adjusted Long term trend = 100 108 106 104 102 Analytica's CLI 100 GDP 98 96 94 92 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Chart 1 depicts Analytica’s CLI together with trend adjusted GDP. The chart shows that the CLI leads GDP by around six months. A hollow triangle has been placed on Chart 1 for the month of March 2016 indicating a tentative CLI turning point to the downside. Other things unchanged, it is likely that the CLI will change course to the upside in the next few months as fish catches increase following the resolution of the fishermen strike on February 19. As seen in Chart 2 rapid growth is still forecast into 2017. The forecast is based on the Iceland CLI and its components after shifting forward by six months. The purpose of Chart 2 is to put GDP in context with the leading indicator depicted on Chart 1. A turning point to the upside corresponding to the one in Chart 1 is placed in February 2015. GDP growth in Q3 and Q4 was somewhat above the CLI based projection. Furthermore, the long term upward trend remains strong. Chart 2. GDP and Analytica‘s forecast into year 2017 ISK 000m per month - 2005 Prices 117 Q4 115 113 111 109 107 GDP 105 Analytica's CLI based Forecast 103 101 99 97 95 93 91 89 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: GDP figures for 2014, 2015 and 2016 are preliminary estimates by the Statistical Bureau of Iceland. The GDP figures presented in Chart 2 are based on the official quarterly estimates of the Statistical Bureau of Iceland. The quarterly GDP numbers have been distributed over individual months. The figures are seasonally adjusted and smoothed and are in amounts of thousands of million ISK at fixed 2005 prices. There are six components of Analytica’s CLI. These are: Fish catches, inflation adjusted debit card turnover, number of tourists visiting Iceland, the MSCI World equities index, inflation adjusted imports and the Gallup Index of Consumer Confidence. For February, two of the six underlying components are strengthening year on year. However, three of the six components rise on the previous month. See Appendix, Charts A1 and A2. Some revisions to the index values have taken place. This is a result of component revisions and in part a result of the methodology employed, including the long-term trend estimate. Table 1 shows the development of the CLI during the past twelve months. The value for February rises by 0.1 per cent to 100.4. This value serves as an indicator to economic activity six months into the future, i.e. August 2017. A value of 100 indicates GDP in line with its long-term trend. Table 1. Analytica's CLI 2016-2017 2016 February March April May June July August September October November December 2017 January February Change in % Index on month YOY Indication for month 101.8 101.7 101.6 101.5 101.5 101.4 101.5 101.5 101.3 100.9 100.5 0.1% -0.1% -0.1% -0.1% 0.0% 0.0% 0.0% 0.0% -0.2% -0.3% -0.4% 2.0% 1.8% 1.8% 1.6% 1.4% 1.0% 0.7% 0.5% 0.2% -0.4% -1.0% August 2016 Sept. Oct. Nov. Dec. Jan. 2017 Feb. March April May June 100.3 100.4 -0.3% 0.1% -1.4% -1.3% July August The March Composite Leading Indicator is scheduled for release on April 19, 2017. Further information is provided by Analytica’s CEO, Mr. Yngvi Hardarson Tel. +354 5278890 - email: [email protected] Iceland Composite Leading Indicator - Appendix Chart A1 - Analytica's Leading Indicator - Individual Components Per cent Change Year on Year * Debit Cards 10 Consumer Confidence Cons. Confidence 125 100 5 75 0 50 -5 25 0 -10 -25 -15 -50 -20 -75 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fish Catches 15 2007 2008 2009 2010 30 5 20 2012 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 MSCI World 40 10 2011 10 0 0 -5 -10 -10 -20 -15 -30 -20 -40 -25 -50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Imports 20 2007 2008 2009 2010 2011 2012 No. of Tourists 50 40 10 30 0 20 -10 10 0 -20 -10 -30 -20 -40 -30 -50 -40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 * Not Trend Adjusted Notes: Debit Cards: Domestic debit card turnover, inflation adj. – Fish Catches: Chain linked volume index. – Imports: Inflation adjusted imports. Cons. Confidence: Gallup Index of Consumer Confidence. – MSCI World: MSCI World equities index. – No. of Tourists: No. of passenger arrivals at Keflavik Airport. All figures are seasonally adjusted and smoothed. – Shadow on charts covers latest six months data. Sources: Gallup Iceland, Statistical Bureau of Iceland, Central Bank of Iceland, Thomson Reuters, Analytica‘s calculations. Iceland Composite Leading Indicator - Appendix Chart A2 - Analytica's Leading Indicator - Individual Components Trend Adjusted - Trend=1.0 Debit Cards 1.100 Consumer Confidence Cons. Confidence 1.50 1.075 1.25 1.050 1.025 1.00 1.000 0.75 0.975 0.950 0.50 0.925 0.900 0.25 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fish Catches 1.10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 MSCI World 1.3 1.2 1.05 1.1 1.00 1.0 0.95 0.9 0.90 0.8 0.85 0.7 0.80 0.6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Imports 1.3 2007 2008 2009 2010 2011 2012 No. of Tourists 1.30 1.25 1.2 1.20 1.1 1.15 1.0 1.10 0.9 1.05 1.00 0.8 0.95 0.7 0.90 0.6 0.85 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 Notes: Debit Cards: Domestic debit card turnover, inflation adj. – Fish Catches: Chain linked volume index. – Imports: Inflation adjusted imports. Cons. Confidence: Gallup Index of Consumer Confidence. – MSCI World: MSCI World equities index. – No. of Tourists: No. of passenger arrivals at Keflavik Airport. All figures are seasonally adjusted and smoothed. – Shadow on charts covers latest six months data. Sources: Gallup Iceland, Statistical Bureau of Iceland, Central Bank of Iceland, Thomson Reuters, Analytica‘s calculations. About Analytica Analytica provides independent and value added financial advisory services. The company specializes in treasury and risk management services provided to qualifying investors. The company's position is based on decades of experience and expertise. The CEO and founder of Analytica is Mr. Yngvi Hardarson. Mr. Hardarson was born in 1960 and holds an MA degree in Economics from Queen's University of Kingston Canada, with specialization in Econometrics and Monetary Economics. In addition, he holds a certificate in international trade and resource allocation from the Yrjö Jahnsson Foundation in Helsinki, Finland and a CMT designation by the Market Technicians Association in NY. Mr. Hardarson started his career as an economist at the National Economic Institute in 1988. In 1990 he became the Chief Economist at the Federation of Icelandic Industries. In 1993 he co-founded Economic Consulting and Forecasting Ltd. In 2007 and until the summer of 2010 Mr. Hardarson was employed as a Managing Director at Askar Capital hf. Investment Bank. In the period 1993-2008 Mr. Hardarson also served as the editor of Gjaldeyrismál (FX-mail), a daily and subsequently weekly newsletter on FX, money markets and global economics. Further information is provided on Analytica’s web page http://www.analytica.is