The business portal: poslovni.hr, just released news that Croatia will continue with more negative data in respect to the GDP.
The GDP will continue falling, but moderately, as the report claims. As per the report: (the report has been translated using Google Translate, for a more thourogh view of the report please see the originial):
"The economic downturn in the first quarter is attributable to personal consumption, regardless of the slightly earlier date of Easter. Negative impact on the growth of GDP as compared to previous periods could come from net exports, in accordance with fluctuations in foreign trade, "said one of macroeconomists in the survey Hine.
Due to the recession in the eurozone, our largest trading partner, weakens the demand for exported goods, which badly affects the Croatian exports. In the first three months of this year, exports fell by 7.9 percent compared to the same period last year.
"A slight increase in industrial activitiy and construction work can hardly compensate for the decline in private consumption and exports in the first quarter," says one of ht emacroeconomists in the survey of Hine."
Of course, just as all reprots go, the main problem has been and always will be exports. It is somehow impossible that we can never get any export growth (even though there are mouths to feed in our own country). And we have the dreaded GDP figure collapsing again.
The reason why mainstream economists missed the crisis is due to the fact that they consider GDP growth to be a positive thing. I beg to differ. Remember, GDP consists of consumption, invenstments, government spending and net exports.
First of all, and pardon my logic, how is it possible that consumption and investment go on the samre axis? When constructing a GDP curve, as taught in mainstream 101 macro classes, the GDP is created by combining the nominal values of the governet spending curve (which is always in ascension), the investment curve and the consumption curve. Adding all of these, get the GDP.
As long as the belief holds that investment and spending are located on the same axis, we will continue to have recessions and bubbles in various markets. That is why I believe that if the monetary system is reformed, and we have the "peoples money" (which is nothing else but the peaceful choice among individuals to choose an object with which trade will be conducted) and a 100% reserve banking system, the GDP will not matter as yardstick of economic health. The only body that prints these figures is the governmet, a source of high competence.
The fall in GDP in Croatia might be a sign of a recovery, the washing away of excess malinvenstments that occured during the previous bubble years. But due to the fact that the government has increased their role in the economy, ballooned their public debt and used the banking system to inflate their way out of their mess, I believe that there is more pain to go.
Over the past quarters, the nations stock index (CROBEX) has shown emmence volatility, ralling and dropping (bottoming out in the current period). This can be attibuted to the inflow and outflow of money provided by the banking system. There is no reason that the CROBEX would rally. There are no good news, no new manufactuing firms, the national debt hasn't gone done, the structural unemployment issue still remains and the governent has expanded.
The only reason that the index would rise would be to nominaly money supply growth. The fall, relates to the destuction in the money supply. That is why the GDP figure is such a horrible indicator. It doesn't take into inflation (even though it is deflated for the "official core number") and capital missalocation that it creates. The figure contains government outlays - a drag to the econmoy, or better put: expenditures that don't go in line with consumer preferences). And finally: Any GDP growth with rising consumption and investment sums up to bogus growth. Or growth that is financed by money expansion and not real savings.
So, we may conclude that there is a recovery in sight somewhere in the economy, probably being reinflated as we speak, and yes there is more pain to come - as long as the government keeps the productive economy in a strangelhold with the assistance of the banking sector, there will be more pain.
The GDP will continue falling, but moderately, as the report claims. As per the report: (the report has been translated using Google Translate, for a more thourogh view of the report please see the originial):
"The economic downturn in the first quarter is attributable to personal consumption, regardless of the slightly earlier date of Easter. Negative impact on the growth of GDP as compared to previous periods could come from net exports, in accordance with fluctuations in foreign trade, "said one of macroeconomists in the survey Hine.
Due to the recession in the eurozone, our largest trading partner, weakens the demand for exported goods, which badly affects the Croatian exports. In the first three months of this year, exports fell by 7.9 percent compared to the same period last year.
"A slight increase in industrial activitiy and construction work can hardly compensate for the decline in private consumption and exports in the first quarter," says one of ht emacroeconomists in the survey of Hine."
Of course, just as all reprots go, the main problem has been and always will be exports. It is somehow impossible that we can never get any export growth (even though there are mouths to feed in our own country). And we have the dreaded GDP figure collapsing again.
The reason why mainstream economists missed the crisis is due to the fact that they consider GDP growth to be a positive thing. I beg to differ. Remember, GDP consists of consumption, invenstments, government spending and net exports.
First of all, and pardon my logic, how is it possible that consumption and investment go on the samre axis? When constructing a GDP curve, as taught in mainstream 101 macro classes, the GDP is created by combining the nominal values of the governet spending curve (which is always in ascension), the investment curve and the consumption curve. Adding all of these, get the GDP.
As long as the belief holds that investment and spending are located on the same axis, we will continue to have recessions and bubbles in various markets. That is why I believe that if the monetary system is reformed, and we have the "peoples money" (which is nothing else but the peaceful choice among individuals to choose an object with which trade will be conducted) and a 100% reserve banking system, the GDP will not matter as yardstick of economic health. The only body that prints these figures is the governmet, a source of high competence.
The fall in GDP in Croatia might be a sign of a recovery, the washing away of excess malinvenstments that occured during the previous bubble years. But due to the fact that the government has increased their role in the economy, ballooned their public debt and used the banking system to inflate their way out of their mess, I believe that there is more pain to go.
Over the past quarters, the nations stock index (CROBEX) has shown emmence volatility, ralling and dropping (bottoming out in the current period). This can be attibuted to the inflow and outflow of money provided by the banking system. There is no reason that the CROBEX would rally. There are no good news, no new manufactuing firms, the national debt hasn't gone done, the structural unemployment issue still remains and the governent has expanded.
The only reason that the index would rise would be to nominaly money supply growth. The fall, relates to the destuction in the money supply. That is why the GDP figure is such a horrible indicator. It doesn't take into inflation (even though it is deflated for the "official core number") and capital missalocation that it creates. The figure contains government outlays - a drag to the econmoy, or better put: expenditures that don't go in line with consumer preferences). And finally: Any GDP growth with rising consumption and investment sums up to bogus growth. Or growth that is financed by money expansion and not real savings.
So, we may conclude that there is a recovery in sight somewhere in the economy, probably being reinflated as we speak, and yes there is more pain to come - as long as the government keeps the productive economy in a strangelhold with the assistance of the banking sector, there will be more pain.
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