Europe may slide into receion_欧洲高等教育院校协会
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Europe may slide into receion FRANKFURT, GermanyFour nationsreported annualized growth of le 1 percentin the April-June quarter.Economies generally must grow at least 2.5 percent a year just tokeep unemployment from rising.Greece and Italy were buckling under the weight of government debt.In Greece, those debtsequaled 161 percent of national output in the January-March quarter, second to Japan's 244percent.Italy's government debt equaled 113 percent.Financial markets have been spooked by fears that Greece and perhaps larger countries, likeItaly, would default on their debts.Banks would be stuck with huge loes on their governmentbond holdings.European banks agreed last week to take a 50 percent lo on their Greek bonds.They willalso set aside more money to cushion against future loes.In addition, eurozone leadershope to strengthen their bailout fund to keep the crisis from spreading to bigger countries.Financial markets roared their approval.Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for InternationalEconomics, says the deal helped ease fears of a catastrophe.“We're not going to have a disorderly Greek default,” he says.“We're also much le likely tohave a large European bank suddenly collapse.” But analysts noted the paucity of details, wondered how many banks would adopt a voluntary50 percent write-down on Greek bonds and questioned where the money for the enlargedbailout fund would come from.European leaders last week approached China for financialhelp.Kirkegaard expects the continent to slip into a mild receion late this year or early next,though its strongest economy, Germany, may escape a downturn.Economic growth in the 17 countries that use the euro will slow to 0.3 percent next year from1.6 percent this year, the Organization for Economic Cooperation and Development estimatedMonday.Some European economies may stop growing altogether, the organization of wealthynations warned.One reason for the peimism: Smaller countries, particularly Greece, Ireland and Portugal,are slashing spending.The bigger ones are raising taxes and also cutting spending.Italy, Europe's No 3 economy, is carrying out a $76 billion package of spending cuts and taxincreases to try to convince bond investors it won't default on its debt.Britain has imposed anausterity program that's stalled growth.The debt crisis has shaken the confidence of those whose spending must fuel growth.Busine executives and consumers seem le likely to step up purchases for new factories orSUVs.And the prospect of having to absorb huge loes on their bond holdings has caused banks toretrench.The European Central Bank's October lending survey showed that banks cut netcredit to businees by 16 percent in the July-September quarter.The 124 surveyed banksexpected even tighter credit as the year ends.Automaker Daimler AG said last week that it saw little prospect of significant growth inWestern Europe.Its French competitor Peugeot Citroen SA said it would cut 6,000 jobsbecause of flat demand in Europe.The weakne has already caused pain acro the Atlantic.Jeff Fettig, CEO of US appliance maker Whirlpool, said Friday that demand is tumbling in partsof Europe.Whirlpool cut its earnings estimates and said it would lay off 5,000 in North Americaand Europe.The United States exported $240 billion in goods to the European Union last year-more thantwice its export total to China.US companies have also sunk $2.2 trillion into long-terminvestments in Europe, such as factories and acquired companies.No other region comesclose to drawing so much US investment.Germany has 2,200 American-owned companies.General Motors and Ford Motor Co.havedivisions based there.ExxonMobil Corp, ConocoPhillips, GE, IBM, Hewlett-Packard Co,Procter & Gamble Co and Dow Chemical Co, all generate billions in annual European sales.Exports have accounted for 47 percent of growth since the Great Receion ended inmid-2009.That's more than twice their share after the previous three receions.“It is the reason Europe matters,” says Steve Blitz, senior economist at ITG InvestmentResearch.
