Good economic prospects for the eurozone
The signs of the time indicate growth again. In the boom year 2010, the majority of the members of the eurozone succeeded in leaving behind the consequences of the global financial and economic crisis. The leader is Germany with Gross Domestic Product (GDP) growth of 3.8 per cent. The euro region expects an increasing worldwide demand for products and services in 2011 – and the industry is suitably prepared. The stability of the euro promotes exports, which are so important for the eurozone. The lack of funds in the budgets of individual countries and their debts do nothing to change this.
German companies in particular are profiting from the worldwide recovery. The machinery and plant manufacturers and the automotive industry are currently achieving large export growth. For example, Volkswagen, Daimler and BMW report huge rises in sales and even shortened the works holidays over Christmas. The orders in the component supply industry are increasing accordingly. The companies' order books are bulging, the machines are running hot and there is already a shortage of manpower in some industries. The development in the chemical, electrical engineering and building industries is similarly positive. The latter is benefiting from energy-saving renovation work on buildings and the large demand for solar and photovoltaic products. The present euro exchange rate is also fuelling the export of products "Made in Germany" and firms are investing again after a long phase of restraint. For example, equipment investment has risen by some four per cent every quarter since the beginning of 2010.
The latest figures show that the economy has not only regained a foothold in Germany. The economic power of Germany's neighbours – Belgium, Denmark, France, Luxembourg, the Netherlands, Austria and the Czech Republic – increased by approx. two per cent in each country in 2010. Growth in Slovenia and Slovakia also picked up speed strongly in 2010. Although the industry there can not yet utilize its production capacities to the full again, the countries are already investing in new machinery and production plants to improve their competitiveness.
Finland as a model
Finland proved its capacity once again with some three per cent growth. This Scandinavian country is one of the most competitive economies in the eurozone. A strict cost-cutting plan, privatization and investment in the high-tech sector and the educational system rescued the country from bankruptcy after trade with Eastern Europe came to an end – triggered by the collapse of the Soviet Union. Today, Finland is distinguished by its extremely low national debt and small budget deficit. The country's most important industries include the metal, electronic, timber and paper sectors.
The difficulties experienced by individual countries in the eurozone in 2010 were offset by loans from the Eurogroup. At the same time, the body of the European Union in which the eurozone states coordinate their fiscal and economic policy imposed strict rules on the countries in deficit. For example, Greece, which drew billions of euros of aid in April last year, is currently preparing reform packages to get its budget deficit under control. Ireland also took cover under the Eurogroup's rescue scheme at the end of last year after the Irish GDP had shrunk by 7.6 per cent. The Irish bank crisis was to blame for this; the actual economy of the island state is basically intact. The experts from the International Monetary Fund (IMF) expect the Irish economy to start growing again as early as 2011 – and even more strongly than the German economy. Spain, which is also shaky, could even manage the turnaround through its own efforts in 2011. The government in Madrid has adopted a strict cost-cutting programme and is strengthening the growth forces for companies at the same time. Spain intends to reduce the national deficit to three per cent by 2013 with fundamental reforms of the employment market, product markets, finance sector and pension system.
Euro extremely stable
The euro has proved to be a stable currency despite the economic upheavals. Disregarding the good economic situation in major euro countries like Germany, the inflation rate in the eurozone is below two per cent – and this ever since the European Central Bank was set up in 1998. The euro's external value is also in good shape: The euro is currently worth 1.29 US dollars, which is still approx. 12 cents above the so-called purchasing power parity, i.e. the exchange rate at which the same quantity of goods can be purchased with a certain sum of money in the two currency regions. Experts consider it unlikely that the national deficit crises of individual countries could break up the monetary union. The euro gives its members too many advantages for them to accept the risks of failure.
Although the EU's once powerful trading partner USA is still suffering from the consequences of the world economic crisis, the number of customers for European products from emerging economies is growing – because the economies in China, Brazil and the emerging countries of Southeast Asia recovered more quickly than in the industrial countries. In addition, Europe should be able to expand its position as leading supplier of eco-technologies in the future. As recently as December, the government in Peking announced its intention to increasingly support sustainable growth in future. India also has excellent prospects of becoming one of the leading users of green building technologies.
Exhibition industry on the up
The exhibition industry confirms the general trend. The Association of the German Trade Fair Industry (AUMA) expects the number of exhibitors and visitors to grow slightly over the previous events, after the industry stabilized to a large extent last year. NürnbergMesse, the number seven among Germany's large exhibition centres, is also looking to the new year optimistically. Its leading exhibitions like BioFach and Vivaness (organic products and natural cosmetics), Brau Beviale (beverage technologies), the European Coatings Show (production of paints and coatings), the exhibition duo POWTECH/TechnoPharm (mechanical processing technologies, instrumentation and life science process technologies) and Stone+tec (natural stone) cover key growth sectors in 2011. Exhibitions are traditionally regarded as economic motors, because they give the industry new impetus.
Germany's economic strength could soon have a positive impact on the entire eurozone, because if wages rise and consumers spend more money again, the weak countries also profit, e.g. from the importation of new products. This fuels foreign industrial production. 2011 should therefore be a successful year for the eurozone.
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