Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061120j.jpg" width="353">
Seasonally unadjusted GDP data are available for the third quarter for Taiwan and Singapore. The year-over-year increase in real Taiwanese GDP in the third quarter was 4.4% while the nominal increase was 3.5% implying a decline in the deflator. While most other countries in the Asian Pacific region--even Japan--have seen a reversal of price trends from declines to modest increases, Taiwan is still experiencing declines. The year-over-year change in the deflator for Taiwan is compared with that of Singapore in the first chart. While both countries show considerable variation in the year-over-year changes in the deflators, there is a clear downward trend in the Taiwan data and a slight upward trend in the Singapore data.
Real growth in Taiwan increased 4.4% in the third quarter. So far this year growth has been steady at around the 4 plus percent level. Growth in Singapore, on the other hand, has declined over the year from 10.7% in the first quarter to 8.2% in the second and 7.2% in the third. The year-over-year growth in real GDP for the two countries is shown in the second chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061120k.jpg" width="353">
Taiwan and, particularly, Singapore are two of the smaller nations of the Pacific Rim. In dollar terms, the GDP of Taiwan is currently about $88 billion and Singapore, $33 billion, compared to Japan&#39;s $1.1 trillion. They have been, however, among the faster growing nations in the East.

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<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q3 06 Y/Y %</th>
<th scope="col">Q2 06 Y/Y %</th>
<th scope="col">Q 1 06 Y/Y %</th>
<th scope="col">2005&nbsp; &nbsp;%</th>
<th scope="col">2004&nbsp; %</th>
<th scope="col">2003&nbsp; %</th>
<th scope="col">2002&nbsp; %</th>
<th scope="col">2001&nbsp; %</th>
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</thead>
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<tr class="odd">
<td class="firstcol">TAIWAN GDP</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current NT$ (NSA)</td>
<td>3.37</td>
<td>3.35</td>
<td>3.47</td>
<td>3.49</td>
<td>4.38</td>
<td>1.22</td>
<td>3.37</td>
<td>-1.69</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Real 2001 NT$ (NSA)</td>
<td>4.92</td>
<td>4.57</td>
<td>4.39</td>
<td>4.03</td>
<td>6.07</td>
<td>3.43</td>
<td>4.25</td>
<td>-2.17</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">SINGAPORE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">&nbsp; Current S$ (NSA)</td>
<td>9.78</td>
<td>6.76</td>
<td>8.15</td>
<td>6.96</td>
<td>12.48</td>
<td>1.98</td>
<td>3.27</td>
<td>-4.03</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Real 2001 S$ (NSA)</td>
<td>10.66</td>
<td>8.17</td>
<td>7.21</td>
<td>6.35</td>
<td>8.72</td>
<td>2.93</td>
<td>4.04</td>
<td>-2.28</td>
</tr>
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<td class="firstcol"></td>
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Seasonally unadjusted GDP data are available for the third quarter for Taiwan and Singapore. The year-over-year increase in real Taiwanese GDP in the third quarter was 4.4% while the nominal increase was 3.5% implying a decline in the [...]

Taiwan and Singapore Report 3rd Quarter Gross Domestic Product

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Andrew Cates

**Global current account imbalances**
Global current account imbalances have continued to shape President-elect Trump’s views on the world economy, particularly in his belief that trade deficits and imbalanced trade relationships are detrimental to US interests. Trump has long viewed large US trade deficits as evidence of "unfair" trade practices by other countries, notably China, Germany, and Japan. He contends that these countries manipulate trade policies, tariffs, and exchange rates to sustain their own current account surpluses at the expense of the US economy, which he sees as absorbing excessive imports and struggling to export competitively in return. As chart 1 below suggests, there was little-to-no narrowing of the US current account deficit (relative to GDP) during Trump’s first term in office from 2016-2020. And since that time the deficit has widened a little and, according to the IMF, is on track to reach 3.3% of GDP in 2024. Allied to this, there has been little net change in the current account surplus position of some of the big creditor economies over the past several years, namely China, Japan and the euro area. 

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**US financial balances**
Some economists (e.g. Michael Pettis*) argue that instead of imposing higher tariffs on the trade in goods, capital controls should be instigated in order to limit foreign purchases of American assets. Still, as chart 2 below suggests, this may not resolve other persistent domestic imbalances in the US. High private savings and limited investment, for example, may instead reflect an ageing population and a structural pivot toward a services-led economy. Equally, large fiscal deficits mirror heavy government spending on areas like healthcare. President-elect Trump’s plans for looser fiscal policy via lower corporate taxes could also widen this fiscal deficit even further, intensifying the economic challenges in the period ahead.

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**Financial market depth**
Why do surplus countries channel their savings into the US? This is probably because of limited opportunities to invest domestically, insufficient financial market depth and the prospect of a lower return on investment. The US, in contrast, has deep, liquid, and relatively high-yielding financial markets, making it an attractive destination for these surplus savings (see chart 3 below). The US dollar’s role as the world’s reserve currency is also significant. Absent policies that shift the relative attraction of US financial markets and the US dollar’s reserve status there are additional reasons for believing that the status quo for global imbalances could persist.

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**Overseas holdings of US Treasuries**
The above notwithstanding, overseas demand for US financial assets – and Treasuries in particular - may wane in coming months should US policy become more protectionist and/or if US fiscal policy were to be loosened. In recent years, foreign ownership of US Treasuries has seen fluctuations. For instance, China's holdings have declined from their peak around 10 years ago. More specifically, in November 2013, China held approximately $1.316 trillion in US Treasuries, marking its peak ownership. But by August 2024, this figure had decreased to $774.6 billion, representing a reduction of about 41% over that period. Elsewhere, Japan has remained a major holder over the same time frame. Indeed as of August 2024, Japan was the largest foreign holder, with approximately $1.129 trillion in US Treasuries, about 13% of the foreign-held stock.  

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**Global trade policy**
The primary policy tool which a new US administration is likely to address imbalances is higher tariffs. But while this would directly raise the cost of bilateral trade, it could also have far-reaching effects on global supply chains. As a major player in global value-added trade, the US contributes significantly to international markets, with high-tech products comprising a notable portion of its exports. Reflecting its advanced manufacturing base, the US adds substantial value to imported inputs, shown by its high domestic value-added share of gross exports. This underscores that much of the value in US exports is generated domestically. Moreover, with moderately high forward participation in global value chains, the US remains a crucial supplier of intermediate goods, underpinning its central role in global production networks.

241114Z5.jpg

**US energy policy**
A further route via which US policy shifts could exert a global economic impact concerns the energy sector. A new administration purportedly plans to aggressively expand domestic energy production by lifting restrictions on oil and gas drilling. That strategy is designed to lower energy costs and reduce inflation. Per capita electricity generation in the US is relatively high compared with many European economies. The share of renewables in generating that electricity, in the meantime, is relatively low (see chart 6). The current position in the US, in other words, implies challenges and opportunities to shift toward renewables. Equally, maintaining the status quo (or putting it into reverse) could generate climate-related consequences, and at the very least, meet with much global resistance. 

241114Z6.jpg

The macroeconomic implications of a new Trump administration are sparking fervent debate. Financial markets have reacted to last week’s news with heightened expectations of some stimulus through looser fiscal policy, which could spur US growth in the near term. However, that boost may come at the cost of higher domestic inflation, more elevated public debt, and a ripple of adverse effects across the world economy. In our charts this week we illustrate some of the forces at play as policymakers weigh up their responses. For instance, global savings imbalances (chart 1), the US current account deficit (chart 2), and international demand for US financial assets (charts 3 and 4) lie at the epicentre of the policy agenda but equally highlight some of the underlying vulnerabilities. Should next year bring policies designed to curb demand for US imports or limit foreign investment in its financial markets, the repercussions for global economic stability could be significant (chart 5). Concerns are also mounting about energy policy, with the new administration eyeing an aggressive expansion of domestic oil production. While this may reduce energy costs and relieve inflationary pressures, it could carry environmental implications and strain international alliances (chart 6). Until such time as US policy become clearer, the easiest forecast is that uncertainty will persist. But even when some policy clarity emerges there are no guarantees that the fog will clear and there is a high probability that it could linger and even thicken. 

Charts of the Week: Leading with a Trump

Tom Moeller

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The Consumer Price Index increased 0.2% during October, the same as in each of the prior three months. The gain matched expectations in the Action Economics Forecast Survey. The y/y increase picked up to 2.6% from 2.4% in September. The three-month increase rose to 2.5% (AR) from 2.1% but remained below the 4.6% April high this year. Prices excluding food & energy rose 0.3% for the third consecutive month, as expected. Core consumer prices increased 3.6% (AR) during the last three months (3.3% y/y), up from 1.6% in July. Food prices rose 0.2% last month (2.1% y/y) after a 0.4% gain while energy prices were roughly steady (-4.9% y/y), following a 1.9% decline.

The CPI less food, energy and shelter, another measure of core pricing power, rose 0.2% after a 0.4% gain. The 2.1% y/y rise remained below the 7.6% y/y peak in February 2022 and compared to a low of 0.3% y/y in May 2020.

Services costs less energy rose 0.3% in October (4.8% y/y) after rising 0.4% in both of the prior two months. Shelter costs rose 0.4% (4.9% y/y) following a 0.2% rise in September. Owners’ equivalent rent of primary residences increased 0.4% (5.2% y/y), following a 0.3% rise. Rents of primary residences gained 0.3% (4.6% y/y), the same as in September, while the cost of lodging away from home rose 0.4% (-0.1% y/y) following a 1.9% September decline. Transportation service prices increased 0.4% last month (8.2% y/y) following a 1.4% September strengthening, as public transportation prices increased 2.4% (2.5% y/y), about the same as in both of the prior two months. Medical care service costs rose 0.4% (3.8% y/y) after strengthening 0.7%. Education & communication prices eased 0.2% (+2.1% y/y) following a 0.1% rise. Recreation services prices rose 0.7% (2.8% y/y) after falling 0.5% in September.

During October, the CPI for goods less food & energy held steady (-1.0% y/y) after rising 0.2% in September. Apparel costs plunged 1.5% (+0.3% y/y) after rising 1.1%. Home furnishings prices held steady (-2.2% y/y), and appliance costs fell 0.6% (-2.3% y/y), both for the second straight months. Education & communication product costs fell 1.1% (-6.7% y/y) after falling 0.7% while medical care product prices declined 0.2% (NSA, +1.0% y/y) in October after a 0.7% decline. Prices for recreation products held steady (-1.7% y/y), after three months of modest decline. To the upside, transportation product prices rose 0.8% (-1.7% y/y) after improving 0.3%. New vehicle prices held steady (-1.3% y/y) after rising 0.2% while used car & truck prices strengthened 2.7% (-3.4% y/y) after a 0.3% rise.

Food prices rose 0.2% (2.1% y/y) in October following a 0.4% September increase. Egg prices slumped 6.4% (+30.4% y/y) after rising for four straight months. Meat, poultry & fish prices fell 0.8% (+0.1% y/y) after rising 0.2% while cereal & bakery product prices jumped 1.0% (0.9% y/y) after a 0.3% rise. Fruit & vegetable prices rose 0.4% (0.9% y/y) after increasing 0.9%, while dairy prices jumped 1.0% (1.3% y/y) after rising 0.1% in September. Nonalcoholic beverage prices rose 0.4% (1.7% y/y) after holding steady in September.

Energy prices remained unchanged (-4.9% y/y) in October after falling 1.9% in September. Gasoline prices fell 0.9% (-12.2% y/y), the fifth decline in the last six months. Amongst other energy products, fuel oil & propane prices weakened 2.2% (-11.9% y/y) after declining 3.1%. Electricity prices rose 1.2% (4.5% y/y) after a 0.7% gain, while natural gas prices improved 0.3% (2.0% y/y) after rising 0.7% in September.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Services price gain slips with lessened increase in medical care prices.
- Core goods prices hold steady.
- Food prices moderate as energy costs hold steady.

U.S. CPI Continues to Rise Moderately in October

Sandy Batten

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Mortgage loan applications edged up 0.5% w/w (12.8% y/y) in the week of November 8 following a 10.8% weekly decline in the previous week. This was the first weekly advance in the past seven weeks. Applications for loans to purchase a house rebounded 1.9% w/w (0.1% y/y) after a 5.1% w/w drop in the previous week, while applications to refinance an existing mortgage fell 1.5% w/w (+42.8% y/y), their seventh consecutive weekly decline, on top of an 18.5% w/w plunge in the previous week. These data are from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

Mortgage interest rates in general rose further. The effective interest rate on a 30-year fixed-rate mortgage inched up further to 7.03% from 7.01% in the week ended November 1. This rate has risen 74bps since its recent low in the week ended September 20. The effective rate on a 15-year fixed rate mortgage was 6.37% in the latest week, up 2bps from the previous week down and up 77bps from the recent low in the week of September 20. The rate on 30-year Jumbo loans slipped 3bps to 7.14% after having jumped 26bps to 7.17% in the week ended November 1. The rate on 5-year ARM loans fell 7bps to 6.29% in the latest week from 6.36% in the prior week.

The share of loan applications to refinance an existing mortgage was unchanged at 39.9% in the week ended November 8, the lowest since late July. The share of applications for ARMs fell to 6.5% from 7.0% in the previous week.

The average size of a mortgage loan application fell 1.9% w/w to $379,300 in the week ended November 8. This was the smallest loan size since the week ended August 30. The average size of a loan to purchase a house fell 1.9% w/w to $436,900, and the average size of a loan to refinance dropped 1.8% w/w to $292,700 in the November 8 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Applications edged up 0.5% w/w after having declined for six consecutive weeks.
- Refinancing applications continued to fall while purchase applications rebounded.
- Mortgage interest rates rose slightly.

U.S. Mortgage Applications Edge Up in November 8 Week

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Retail gasoline prices for all grades slipped to $3.18 per gallon (-8.6% y/y) in the week ended November 11 from $3.19 per gallon in the prior week. Prices stood at their lowest level since the fourth week of January. The recent high was $3.79 in the week ended April 22, and its all-time high of $5.11 occurred in the week ended June 11, 2022. The latest measure of on-highway diesel fuel prices was $3.52 per gallon (-18.0% y/y) versus $3.54 per gallon in the prior week. Diesel prices have ranged between $2.37 per gallon in the week ended November 2, 2020 to $5.81 in the week of June 20, 2022.

Crude oil prices increased to $71.58 per barrel (-7.4% y/y) in the week ended November 8 from $68.39 in the prior week. The recent range of average West Texas Intermediate crude oil prices has run between $69.41 in the week of March 24, 2023 to $91.45 in the week of September 29, 2023. Yesterday, the price was $68.12 per barrel. The price of European Brent crude oil stood at $75.10 per barrel last week (-18.4% y/y) versus $72.01 in the week prior. Yesterday’s price was $72.06 per barrel.

Natural gas prices declined to $1.57 per mmbtu (-36.4% y/y) from $1.82 in the prior week. Prices were below a $2.73 high in the second week of June. The price was $1.21 per mmbtu yesterday.

Gasoline demand fell 1.5% y/y in the four weeks ended November 1, compared to a 3.4% y/y rise in the prior four weeks. Demand for all petroleum products fell 1.5% y/y in the four weeks ended November 1 after a 2.7% y/y increase in the prior four weeks.

Crude oil input to refineries rose an accelerated 5.2% y/y in the four-week period ended November 1 after a 4.0% y/y increase in the prior four weeks. Input to refineries has been declining y/y all through this past August.

Gasoline inventories fell 2.7% y/y in the week ended November 1 after decreasing 5.7% y/y in the week prior. Inventories of residual fuel oil fell 14.6% in the week of November 1 after declining 11.8% y/y in the prior week. In contrast, crude oil inventories grew 3.5% y/y in the latest week following a 4.9% y/y increase during the prior week.

Measured in days’ supply, gasoline inventories rose to 23.8 days in the week ended November 1 from 23.3 days in the prior week. Data in the latest week show the lowest inventories since the first week of November 2022. Crude oil inventories slipped to 26.6 days’ supply in the week of November 1 from 26.8 days in the prior week. These compare to a low of 24.8 days in the week ended September 20, 2024 and a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices ease. Crude oil prices increase, but natural gas prices fall.
- Demand for gasoline increases moderately.
- Inventories of gasoline & crude oil slip.

Taiwan and Singapore Report 3rd Quarter Gross Domestic Product

Summary

Louise Curley

More Economy in Brief

Charts of the Week: Leading with a Trump

U.S. CPI Continues to Rise Moderately in October

U.S. Mortgage Applications Edge Up in November 8 Week

U.S. Energy Prices are Mixed in Latest Week

	Q3 06 Y/Y %	Q2 06 Y/Y %	Q 1 06 Y/Y %	2005 %	2004 %	2003 %	2002 %	2001 %
TAIWAN GDP
Current NT$ (NSA)	3.37	3.35	3.47	3.49	4.38	1.22	3.37	-1.69
Real 2001 NT$ (NSA)	4.92	4.57	4.39	4.03	6.07	3.43	4.25	-2.17

SINGAPORE
Current S$ (NSA)	9.78	6.76	8.15	6.96	12.48	1.98	3.27	-4.03
Real 2001 S$ (NSA)	10.66	8.17	7.21	6.35	8.72	2.93	4.04	-2.28