19.8.09

Recovery will be gradual and slow (by 2013)


Unbelievable propaganda of prosperity and well-being is in most of Polish media. After them politicians are repeating slogans. I wish media here would pass also pay attention to critical views. It is reasonable that after such huge credit crisis and years of mostly importing and selling goods it can not be quick recovery. So if Europe's recovery is estimated around 2013 then Eastern Europe will rebuild itself much later. Bloomberg published its article with very significant title: "Don't be fooled..."

Europe won’t fully recover from the worst recession since World War II until 2013 even if it returns to a “moderate” pace of economic growth, Morgan Stanley says.

The CHART OF THE DAY shows quarterly euro-region gross domestic product, in yellow, is now 4.9 percent below the 1.96 trillion euros ($2.76 trillion) it was before the recession hit. Quarterly growth rates, in blue, show what might be the beginning of a so-called V-shaped recovery. The economy of the 16 nations sharing the euro contracted 0.1 percent in the second quarter from the first, when output plunged 2.5 percent.

“Don’t be fooled by a V-shaped pattern in growth rates,” said Elga Bartsch, chief European economist at Morgan Stanley in London. “Assuming a continued moderate recovery, it would take until 2013 before the euro area will have made back the output losses of the last five quarters.”

The economy began to contract in the second quarter of last year after the collapse of the U.S. subprime mortgage market triggered the financial crisis. The recession will probably come to an end in the current quarter as government and central bank stimulus measures support spending and an improving global economy boosts demand for exports.

Morgan Stanley said while there may be a “vigorous bounce” in industrial output in coming months, this reflects temporary factors such as rebuilding of inventories and a “subsidy-fueled car boom.” Headwinds lie ahead for the euro area, including rising unemployment and the end of government subsidies, the economists said.

Experienced managers are conservative in their predictions of the end of crisis. Chief of Nokia says also that recovery will be
gradual and slow

Nokia Oyj Chief Executive Officer Olli-Pekka Kallasvuo predicted recovery from the global financial crisis will be slow as economies move forward from a lower level of activity.

“The global economy has pressed the ‘reset’ button and we are gradually getting back to business - or new growth,” he said in a speech provided by Nokia. Protectionism is the biggest threat to growth, he said.

Kallasvuo's statement corresponds with facts. Today Austrian Telekom informed of its loss. Net decreased in the first six months of 2009 by 25.8 percent to 167.6 million euros (236.6 million dollars) from 226 million euros in the same period last year.



Ronald Reagan Quotes