All Fall Down
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The document summarizes the state of the European economy, which is contracting broadly due to the financial crisis. GDP dropped and economic sentiment slumped to a 15-year low as purchasing managers' index dived, indicating the economy is shrinking. Credit has dried up, cramping consumer spending, business investment, and exports. Banks are being more selective about loans as they scale back balances sheets. A small positive is the recent fall of the euro may help euro-zone firms that had gained strength and market share during preceding years of a strong euro.
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All Fall Down
- 1. All fall down A broad-based contraction is well under way in Europe Nov 6th 2008 From The Economist print edition Kadi Saviauk EP1
- 2. Main topics The indicators of European economy Credit drought cramps consumer spending, business investment and exports Banks are being more selective about loans Crumb of comfort for euro-zone firms
- 3. The indicators of European economy The region was already struggling before the financial crisis GDP dropped There is worse to come: Purchasing managers´ index dived from 46,9 to 43,6 (score below 50 indicates the economy is shrinking) Measure of economic sentiment slumped to a 15-year low GDP-growth forecast slashed from 1,5% to 0,1% for 2009
- 5. Credit drought cramps consumer spending, business investment and exports Household spending shrank in each of the year’s first two quarters Retail sales fell by 1,6% in the year to September New-car sales fell to their lowest level in October since 1997 Orders to European firms have cooled down Exports had been hurt by the downturn in Britain and America, the euro-zone’s two largest overseas markets.
- 6. Banks are being more selective about loans Banks scale back their balance-sheets Bank loans to non-financial firms rose by 12,1% in the year to September Lenders may look to strengthen ties with their more solid customers at the expense of retailers, property developers and private-equity firms
- 7. Crumb of comfort for euro-zone firms The currency has plunged against the dollar The long preceding period of euro strength may have left European firms stronger European firms have been quicker to gain a foothold
- 8. Thank You for Your attention!