Friday August 22, 2014 Search
Weather | Athens
32o C
25o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Euro area crawls in recovery as car sales hint at further growth

Angeline Benoit & Kristian Siedenburg

The euro zone probably notched up a third quarter of growth at the end of 2013 in a recovery that has yet to convince Mario Draghi as he considers more stimulus.

With gross domestic product forecast by economists to have risen just 0.2 percent in the three months through December after climbing 0.1 percent in the prior quarter, the European Central Bank president has cited that data due this week as a focus of officials. They are preparing forecasts and a menu of possible policy measures for their decision in March.

In Spain, a frontline of Europe’s economic pickup after a record-long recession, retiree Candido Lopez and his wife Asuncion Diaz have already chosen to bet on the recovery. They held off buying a car last year for fear their son might lose his job, but have now decided that the time is right.

“The situation has improved in the sense that we’re out of the recession,” Lopez said as they stepped out of a downtown Madrid dealership for BMW AG cars in January. They will return this month to swap an 11-year old Citroen Zara for a new BMW X1.

Such decisions are priming Europe’s car industry for its first year of expansion since 2007, underscoring the turnaround in the economic outlook. Sales last year dropped to their lowest level since 1995 as Europe’s debt woes provoked the euro region’s longest recession since the 2008 financial crisis.

“Car sales reflect the improvement in domestic demand in response to slower fiscal austerity last year,” said Gilles Moec, European economist at Deutsche Bank AG in London.“Buying a car is the perfect example of discretionary spending, postponed when short-term prospects deteriorate, and the first to come back as labor markets stabilize and countries talk about tax cuts.”

Euro-region GDP data will be published on Feb. 14 at 11 a.m. in Luxembourg, part of a marathon of releases that begin with France’s report at 7:30 a.m. in Paris followed by data for Germany, the region’s largest economy, half an hour later. For the euro area, all 41 economists in a Bloomberg News survey predict growth, with forecasts ranging from 0.1 percent to 0.4 percent expansion.

“The economic recovery is slow but it won’t be derailed,” said Robert Wood, an economist at Berenberg Bank in London and a former Bank of England official. “What we’re seeing is a gradual exit from the euro crisis as the pain of fiscal adjustment eases and confidence returns.”

Among companies set to benefit from further spending, carmakers are predicting an increase in demand that won’t only be fed by their incentives and a government cash-for-clunkers program in Spain. U.S. firm Ford Motor Co.’s Stephen Odell last month said new-car sales in its 19 main European markets may rise almost 6 percent this year.

“GDP growth is turning around in the European market, including peripheral countries,” said Sascha Gommel, an automotive analyst at Commerzbank AG in Frankfurt. “Lower refinancing rates should also make companies more competitive with regard to leasing and financing.”

Gommel sees sales rising 3.5 percent in Europe this year, while International Strategy & Investment Group’s Erich Hauser, in London, predicts an increase of 4.2 percent. London-based analyst at Ernst & Young Anil Valsan sees gains of up to 3 percent due to weaknesses in France and Southern Europe.

Back in Madrid, Lopez, a 62 year-old former employee of Spain’s state-owned train operator Renfe, says his family’s situation has stabilized. Both his son and daughter-and-law escaped a job cull in the nation’s banking sector last year, after it was bailed out by the European Union.

While some consumer spending may be picking up, the ECB said on Jan. 29 that lending to companies and households still declined for a 20th month in December, shrinking 2.3 percent from a year earlier. Draghi says he stands ready to do more to boost growth after an unexpected slowdown in euro-area inflation.

Draghi, speaking on Feb. 6 after the ECB’s monthly decision, said that the snapshot of growth due this week will inform officials as they prepare quarterly forecasts and await final consumer price data for January.

Should the ECB decide to act next month, options might include another interest-rate cut from the current record-low 0.25 percent, ending the absorption of crisis-era bond purchases, or issuing fresh long-term loans to the region’s banks.

“Output in the euro area is expected to recover at a slow pace,” Draghi said. “We are willing and we are ready to act.”

[Bloomberg]

ekathimerini.com , Monday February 10, 2014 (10:08)  
Spanish government bonds rise with Italy´s before Draghi speech
Greek peach farmers await Brussels decision on compensation
Report: Greek banks sturdily positioned
Economy stunted by property tax demands, report says
Police seek three gunmen behind Distomo robbery, hostage found safe
Police were seeking the perpetrators of a daring bank robbery in Distomo, Viotia, on Friday afternoon during which they took an employee hostage in their getaway car but released him before ...
Migrant dies after boat sinks off Tilos, 81 rescued
Greek coast guard vessels were scouring the area off the coast of Tilos, in the Dodecanese, on Friday after a smuggling boat carrying dozens of would-be immigrants sank following a fire on t...
Inside News
West Brom sign Greek international striker Samaras
West Bromwich Albion have signed Greece striker Georgios Samaras on a two-year contract following his release from Scottish champions Celtic, the English Premier League club said on Friday. ...
SOCCER
Panathinaikos, Asteras Tripolis notch up vital wins in Europa League
Thursday proved a very productive night for two of the three Greek teams performing in the Europa League as Panathinaikos and Asteras Tripolis secured vital wins in the first legs of their p...
Inside Sports
COMMENTARY
On steroids
Bodybuilders are in a league of their own. They rarely make headlines for their achievements, their performance, or being role models. In contrast, they’re more likely to make the news due t...
EDITORIAL
Time to kick a stupid habit
Official figures indicate that tax dodging continues unabated across Greece’s tourist areas. According to data made available by the Finance Ministry following checks conducted between July ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Police seek three gunmen behind Distomo robbery, hostage found safe
2. West Brom sign Greek international striker Samaras
3. Migrant dies after boat sinks off Tilos, 81 rescued
4. Hardouvelis hears grievances of coalition MPS to unified property tax bill
5. Avramopoulos, Hagel hammer out ´roadmap´ of defense cooperation
6. Spanish government bonds rise with Italy´s before Draghi speech
more news
Today
This Week
1. Aftershocks rattle Halkidiki after strong 5-Richter quake
2. Coast guard intercepts 180 migrants in Aegean in two days
3. Avramopoulos, Hagel hammer out 'roadmap' of defense cooperation
4. Greek peach farmers await Brussels decision on compensation
5. Spanish government bonds rise with Italy's before Draghi speech
6. Hardouvelis hears grievances of coalition MPS to unified property tax bill
Today
This Week
1. Carved sphinxes at Ancient Amphipolis tomb will not be removed
2. Treating Amphipolis with care
3. Canada’s fiscal adjustment has lessons for Greece
4. Greece to offer law on restructuring bad loans next month
5. Ministry sys ‘no’ to debt collection agencies
6. The magical mountain
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.