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Weak growth in Europe

6 November 2012, Eindhovens Dagblad

Western Europe’s economy should grow slightly next year.  “We expect a result just above the zero mark”, says Martien Verleg, director investments  for Wealtheon, an Eindhoven-based asset management company. The emerging countries, led by China (+6 per cent), score highest:  India (+5), Brazil (+4) and South Korea (2 to 4 per cent). Growth in the USA will be a maximum of 2.5 per cent in 2013.

“In America we are seeing the first signs of recovery”, says Verleg.  “House prices (both new and existing) are picking up. The housing market, which triggered the crisis in 2008, now also serves as the first indicator of recovery.” Meanwhile, spending has also increased in the USA.  Verleg: “Since 2010 there has already been a slight recovery in the number of jobs.” It is worth noting that while the unemployment in America is falling, in Europe there is a steady increase in the number of people without work.

Verleg feels that it does not make any difference in itself who the new American president will be. “Both Romney and Obama would have to increase taxes and stimulate growth”, says the Wealtheon spokesman. Verleg expects that it will still be a while before an economic recovery in Europe. Verleg: “It is a kind of Echternach procession: two steps forwards, one step back.” To curb the crisis in Europe, it is important for ‘Brussels’ to reach a clear agreement with the Member States in the euro zone on observing the agreed three per cent limit on deficits. “That is the only way to prevent the other countries from ending up in the same situation as Greece.” To restore growth, there must be more investment by both government and business. For the moment Wealtheon does not expect the influence of ‘Brussels’ on national budgets to grow a great deal. “European unification is a long term project. After all, it was back in the early 1950s that we took the first steps with the European Coal and Steel Community, one of the forerunners of the European Union.”

Written by Hub Dohmen


Macroeconomics


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