Eurozone's indicator economy has stopped growing

lorenzo · Fission Joined: Jan 01, 2005 Posts: 2210

Belgium is the Eurozone's indicator economy, meaning that both the statistical and economics departments of the Eurozone as the individual governments take its numbers as a standard for predicting the future of their own economies.

Things don't look good. The latest "flash-estimate" shows that growth in the first quarter has slowed down to 1.9%, while inflation on year basis is the highest in four years (now at 3,1%).

The blame is put squarely on high petroleum prices.

Consumer confidence has dropped to lowest levels in 19 months.
Entrepreneurial confidence has dropped to lowest levels in 48 months (!!).

We can expect some dreadful news coming out of the UK, Germany and France soon.

See: De Standaard.
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Aaron · Posted: Thu Apr 28, 2005 1:21 pm Post subject:

So much for the "We can grow our economies and lower energy use" idea huh?
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"When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.

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Wildwell · Fission Joined: Feb 03, 2005 Posts: 2080 Location: UK

The UK is not doing too badly. There are clouds on the horizon though:

- The housing market is slipping - prices are down in some areas. Mind you this is to be expected, most of the housing stock is unaffordable for first time buyers. The average price is over $300,000 and you would be lucky to find anything under $170,000 anywhere.
- Consumer confidence is low. Some stores are having ongoing difficulties, mainly traditional chains and shops. The large supermarkets are growing very well though. It’s unclear how much of this is due to changing shopping habits and the internet.
- Manufacturing is having problems, especially because of high oil prices and the strong pound.
- The Trucking industry is on its knees because of the European working time directive coupled with short labour supply and high fuel prices.
- Unemployment is up for the 4th month on a row. Large scale redundancies in at some firms. Eg Rover
- Growth is still strong but is slowing

The only maverick with fuel prices are airlines, with the growth in cheap foreign breaks still growing strongly. However a downturn in the economy and aviation fuel tax may change that.

http://news.bbc.co.uk/1/hi/business/4471611.stm

Wildwell · Fission Joined: Feb 03, 2005 Posts: 2080 Location: UK

smiley · Fission Joined: Apr 16, 2004 Posts: 2144 Location: Europe

Wildwell · Fission Joined: Feb 03, 2005 Posts: 2080 Location: UK

Another thing I ought to add: Surely, there is a severe mis-allocation of resources, if airlines and car transport is growing like mad – big users of oil and luxury uses. Yet, farming and trucking is on its knees because if high fuel prices caused by growth in the former.

I think it's a lot more complex than oil prices in any case. There is a whole bunch of other issues afoot, from immigration pushing up housing prices and lowering wages, more credit since heavy deregulation took place in the late 1990s, changes in shopping and buying habits, changes in social habits and so on and so forth. A lot of the job losses are because firms are moving abroad to China and India because of high wages here and cheap energy.

Aaron · Posted: Thu Apr 28, 2005 3:29 pm Post subject:

smiley · Fission Joined: Apr 16, 2004 Posts: 2144 Location: Europe

ECM · Heavy Crude Joined: Feb 09, 2005 Posts: 230

Licho · Posted: Fri Apr 29, 2005 3:31 am Post subject:

Well even -5% annual GDP change is "keep running" imo.. World doesn't fall apart when economy shrinks a bit, but eurozone economy apparently still grows, 1.9% is a nice number, higher than in Japan or USA few years ago..

And regarding gasoline vs. diesel - vast majority of cars is still running with gasoline engines, but it's true that diesel consumption is increasing..

Enquest · Tar Sands Joined: Mar 29, 2005 Posts: 49

The first 3 months of the Belgium Economy had a 0% grow. With growing fears of recesion. Scape goat are the high oil prices

Madpaddy · Expert Joined: Jun 25, 2004 Posts: 2124

Some economists are even talking about an ECB rate cut before the end of the year because of the anaemic growth rates.

Aaron · Posted: Fri Apr 29, 2005 10:50 am Post subject:

Simmons
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"When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.

Praise HawkMan

Wildwell · Fission Joined: Feb 03, 2005 Posts: 2080 Location: UK

Much of the oil problem is about misallocation of resources:

Too much road travel, estimated to be costing Britain £30bn in the next ten years per year.

http://news.bbc.co.uk/1/hi/uk/4494821.stm

Cheap flights, with no tax on AV gas.

Then you have problems with farmers staying in business and manufacturers costs rising. IE the things we don't need or should be more expensive are going through the roof and the things we do need (like agriculture) need to be subsidized because of increased use. Madness.

Oh and this problem

http://news.bbc.co.uk/1/hi/health/4496947.stm

I note it is generally Americans that believe energy = money, I wonder why that is...

Aaron · Posted: Fri Apr 29, 2005 2:03 pm Post subject: