AFN Y2013 Year End Fiscal-Economic Report [Complete]

[Empire of Symphonia]

Asian Federation of Nations Ministry of Trade and Economics

Year 2013 Fiscal and Economic Report

Table of Contents

Topic 1 – Economic Analysis

Section 1. Overall Internal Economy AFN-UK
Section 2. Economic Relations between the AFN and Aquitayne
Section 3. Economic Relations between the AFN and Astyria
Section 4. Internal and External Issues

Topic 2 – Fiscal Analysis

Section 1. Overall Fiscal Situation

[Empire of Symphonia]

Section I. The Overall Economy of the AFN

Real gross domestic product -- the output of goods and services produced by labor and property located in the AFN -- increased at an annual rate of 3.2 percent in the fourth quarter of 2013 (1 October 2013 – 31 December 2013), according to the "advance" estimate released by the Office of Economic Analysis. This is a relative decline in comparison to the third quarter (1 July 2013 – 30 September 2013), where real GDP increased 4.1 percent, the highest rate of growth for the entire 2013 fiscal year. In the first quarter (1 January 2013 – 31 March 2013), the real GDP grew at -0.3%. The second quarter (1 April 2013 – 30 June 2013) saw little growth at approximately 0.1%. This totals to a yearly average growth of approx. 1.78% annual growth rate.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory investment, and state and local government spending that was partly offset by negative contributions from federal government spending and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, also increased.

The deceleration in real GDP in the fourth quarter reflected a deceleration in private inventory investment, a larger decrease in federal government spending, a downturn in residential fixed investment, and decelerations in state and local government spending and in nonresidential fixed investment that were partly offset by accelerations in exports and in PCE and a deceleration in imports.

The price index for gross domestic purchases, which measures prices paid by all residents within the AFN, increased 0.9 percent in the fourth quarter, compared with an increase of 0.2 percent in the third. The second quarter saw a price index increase of 0.34 percent, and the first quarter saw an increase of 0.2 percent. Overall, inflation and price increases were negligible for the entire year, allowing for real GDP to make gains without negative contributions from inflation.

*Please note values are given in Imperial Kokus (I$) and NationStates Dollars (NSD$)

Economic Data (2013)	Value
GDP (Real) at 2013 Year End (estimate)	I$ 8.919 trillion (NSD$ 14.908 trillion)
GDP (Nominal) at 2013 Year End (estimate)	I$8.955 trillion (NSD$ 14.698 trillion)
2013 Growth Rate per annum (approx)	1.78%
2013 Average Inflation Rate	0.41% (below Federal Reserve target)

The economy of Symphonia has a large, if disproportionate impact on the overall economic well-being of the country. Of the total real GDP, Metropolitan Symphonia contributes about 47% or, I$ 4.192 trillion (NSD$ 7.007 trillion). The Empire of Hienkoku and the Kingdom of Huanqiu each respectively hold 20% (I$ 1.782 trillion; NSD$ 2.979 trillion) and 18% (I$ 1.604 trillion; NSD$ 2.681 trillion), while the Republic of Cheonsa holds 11% (I$ 0.980 trillion; NSD$ 1.638 trillion). The economy of Singapore and the Xinhai Regions makes up the remaining 4% (I$ 0.356 trillion; NSD$ 0.596 trillion)

The major industries of the AFN revolve around the financial, information technology, and manufacturing sectors, which grew at 2.3%, 0.9%, and 1.3% respectively. The main reason for this growth can attributed to the growth in the job markets of West Genevira and Symphony due to private investment, especially in the renovation of Li Yuanhong International Airport and increased international activity on the part of the Imperial Bank of Symphonia. Foreign companies working in Symphony, notably Ilius Financial and a number of foreign import-export services, contributed notably to the job market in the City.

The Metropolis of Symphony continues to significantly affect the economy of Symphonia, taking up almost a quarter of the national real GDP of that country, and is the reason for Symphonia’s economic stranglehold over the rest of the AFN. Both the Imperial City of Symphony and the Federal Capital of West Genevira grew at a steady 3.4%, and inflation moved up from 0.2% last quarter up to 0.9% this quarter. Government spending by the Metropolitan Corporation of Symphony and by the Symphonian imperial government contributed to GDP growth. However, the share of AFN government spending decreased this quarter as part of Prime Minister Adaminghir Singh’s Q3 and Q4 budget cuts took effect.

The agricultural sector decreased in overall net production, growing at -2.3% this year. This is due to in part of continuing reconstruction efforts along the West Coast of Symphonia and northern Huanqiu following the Great Asian War that have yet to stem the rate of toxification from leftover Japanese weapon buried underground. The mining and energy sectors also declined, growing at -3.4% and -2.5% total this year due to rapidly declining coal and iron deposits in the Central Mountains, as well as a registered decline in petroleum reserves/production from the Liaoning Oil Field in the Sea of Evendium.

A special case for the Republic of Cheonsa, the Xinhai Metropolitan Region, and Singapore can be made. These regions continue to recover from the effects from Third Symphonian Civil War (better known as the Seong-Kiramashi Conflict).

Overall the economy of AFN continues to evolve slowly into a tertiary economy based on financial services, information technology, the manufacturing of high technology. Secondary and primary industries continue to decline and their share of laborers has lessened in recent years.

[Empire of Symphonia]

The Constitutional Monarchy of Aquitayne is a United Kingdom sister state and is the leading member of personal union with the Empire of Symphonia. Trade relations have been excellent since the accession of the Empire of Symphonia and the rest of the AFN into the original Union of Epic Nations region, and have only grown since that time. The Glogoth trade embargo, which shook international markets mid-quarter last year, only served to further unify the economies of Aquitayne and Symphonia, further tying the United Kingdom together as a single economic unit.

The majority of trade with Aquitayne passes through the Port of Symphony and the north Hienese ports as part of the new "southern" strategy of Symphonian and Aquitaynian merchants and trade companies. Lines of supply between both nations follow the commercial sea lanes and air routes going around the southern and western coasts of Stretta. While this has increased costs, it is preferable considering that older routes through the Mican Strait near Pangus and the east coast of Stretta are currently under the UK Exclusion zone as a route of UK intervention in the Feri Insula.

Aquitayne currently is the destination of approximately 35% of all AFN manufactured and basic products, which notably include computers hardware, computer software, aircraft components, silk cloth, exotic fruit, financial services, rare earth metals, iron, and coal. It is the single largest export market for Symphonian products and is projected to remain in that position for the next fiscal year, regardless of trade growth with other Astyrian nations.

From Aquitayne, the AFN imports 50% of its consumer and industrial products, most notably agricultural goods and steel. The reason for this is that Symphonia's large population and small land are means that cities and urban areas take up much of the available land area. Furthermore, a large portion of the workforce continues to enter the tertiary sector and the cost of steel production and the production of other basic manufactured goods in the AFN continues to increase as natural resource deposits are exhausted. It is projected that by late 2014, Symphonia will be importing nearly I$ 6.2 trillion (NSD$ 10.363 trillion) worth in agricultural products from Aquitayne alone, along with I$1.3 trillion (NSD$ 2.173 trillion) in basic manufactured goods. By that time, the Office of Trade and Economics predicts that the AFN will begin importing vast quantities of natural resources to fuel its industrial capacity, and that the cost of importing natural resources from abroad will mean that the manufacturing power of the AFN will undoubtly shrink.

In the short term, the economy of the AFN remains larger than that of Aquitayne, though the latter is growing rapdily in comparison thanks in part to the "catch-up effect". The Office of Trade and Economics suggests that given the current rate of Aquitaynian businesses development on the world stage, the AFN government and Symphonian government policies be aligned for easier foreign access into the domestic market in order for the AFN to benefit from the rise of Aquitayne, and the rest of the region of Astyria, as a potential economic great power.

However, the Office also suggests that the political climate in Aquitayne may be of some issue as of late, given the relatively hostile climate to business and or stringent business regulations. (For more, please refer to the recent article about the Aquitaynian economy here.) In which case that climate continues to presist, the Office suggests that the AFN and Symphonian governments to make it easier for ease of business here in the AFN so that UK corporations may easily transfer operations between members.

[Empire of Symphonia]

The region of Astyria is home to some of the largest economies in the NationStates World. ViZion and Romberg are notable examples of major players in the World Market, as are Neu Engollon, the Dangish Empire, the Blackhelm Confederacy, and other nations. Undoubtably, the region of Astyria is among the more powerful of the Global Economics and Trade Regions.

The United Kingdom itself contributes several notable, quickly growing companies, the latest being Ilius Financial of Aquitayne and Li Yuanhong Intl' Airport of Symphonia. The Imperial Bank of Symphonia has also seen a recent increase in foreign operations, opening new branches in four news regions and adding several thousand new branches worldwide.

Within the region however, the AFN remains a lower player in the economic order, a direct result of Symphonia's general withdrawl and isolationism from the global economy and international affairs for the past few months. Recent attempts to jumpstart the economy have been based around the use of Symphonia's geographic position as a possible advantage for transshipment trade and international travel, which stimulated the economy in the Q3 and Q4.

However, the total share of trade in the Mare Ferum basin, let alone the region, totals to no more than 40% when combiened the trade of Aquitayne. This value, while signifigant, is another sign that Symphonia's economic status has dimmed as of late and that it may be time for greater interaction with the rest of the region. As of now, almost all Symphonian trade is diversified and is conducted with nations in Astyria. Aside from Aquitayne, Symphonia's largest trade partners are ViZion, the Dangish Empire, the Blackhlem Confederacy, Romberg, Stretta, and Nikolia.

The remainder of Symphonia's imports also come from within the region. A number of consumer services are provided from ViZionese companies, and a large portion of agricultural and natural resource imports come from the Blackhelm Confederacy, almost 23.7%.

Given the membership of the AFN in the Council of Ten and the expected relaxation of UK internal trade laws , it is hoped that the economy will be able to grow quickly in the new year.

[Empire of Symphonia]

The economy of the AFN remains heavily dependent on foreign trade and investment to ensure viability. While the domestic consumer market is large, net capital outflow, or rather, inflow, is a necessary part of the Symphonian consumer economy. Large imports continue to offset an growth in exports, and the service sector has yet to rebound. The household final consumption expenditure (HFCE) continues to take up a large part of GDP per capita per household, and the saving rate remaining at all-time lows around 14.7% of total real GDP.

Currently, the economic climate remains uncertain. ViZion's economy is projected to remain unstable, and a collapse in that economy is the very real threat of throwing the entire region into economic turmoil. The Ministry of Finance and the Federal Reserve have taken steps to ensure that a market shock will be lessened in impact, but given the proximity of ViZion and its many businesses, it remains uncertain about how planned response measures may work.

The trade deficit currently is growing at I$ 2.491 trillion (NSD$ 6.164 trillion) per year, thanks in part to large energy and agriculture imports, along with growing steel and metal imports. Total imports are at I$11.447 trillion (NSD$ 19.133 trillion) or approx 127.83% of the nominal GDP.

[Empire of Symphonia]

The 2013 fiscal year ended in a budget deficit for the entire AFN. Thanks in part to the global economic downturn during the Golgoth blockade and the current economic vagaries, government revenue was reduced by 5.5% compared to the 2012 fiscal budget as a result of tax cuts for all income brackets and corporate taxes. Contractionary fiscal policy was continued by the Singh Ministry in the 3Q and 4Q, when excise and sales taxes were reduced.

Government spending by the AFN decreased in part to reflect cuts in revenue, however regional and provincial government spending increased, contributing to the budget deficit.

Fiscal Data (2013)	Value
Received Revenue	I$ 1.784 trillion (NSD$ 2.982 trillion)
Allocated Budget	I$ 1.967 trillion (NSD$ 3.288 trillion)
Budget Surplus/Deficit	I$ -183 billion (NSD$ -305.8 billion)
Total Debt	I$ 1.843 trillion (NSD$ 3.081 trillion)