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The first quarter of 2003, the economic situation of the euro area


[Abstract] caused by the Iraq crisis, the uncertainty of the impact of the first quarter of 2003, slowing growth in the euro area private consumption and investment to hesitate, struggling foreign trade, but the core inflation rate low, the basic appreciation of the euro was welcomed . Calculated quarterly real GDP for the first quarter of this year, -0.1-0.3% in the second quarter,[link widoczny dla zalogowanych], 0.2% -0.5% in 2003, annual economic growth rate of 1.3%, lower than the European Commission in autumn 2002 forecast of 1.8% level. 2002, the euro area from the fourth quarter of 2001, a short walk out of recession, recovery, but picked up fast enough, and again from 2002 summer slowdown, the fourth-quarter GDP on a quarterly basis calculated by only 0.2%, 0.4% lower than the first three quarters of the level of annual real GDP growth of 0.8%, 0.7 percentage points lower than the previous year. Beginning of 2003, the Iraq crisis to the world economy a great deal of uncertainty, short-term economic outlook uncertain. The European Commission prepared a comprehensive reflection of industry, construction, consumer confidence, retail economic confidence index in May of last year's high of 99.5 continuing to fall, in January of this year were 98.2 1,2. Economic confidence index below 100 means there will still be negative growth in the second industry. The European Commission forecast quarterly real GDP calculated by the first quarter of this year was -0.1-0.3% in the second quarter, 0.2% -0.5% in 2003, annual economic growth rate of 1.2%, lower than the European Commission in autumn 2002 forecast to 1.8% level. 1, private consumption growth slowed by the stock market decline, rising oil prices, rising unemployment, public finance , and the deterioration of the Iraqi crisis put the world economy the impact of slower consumer income uncertainty is expected to increase consumer confidence since September 2002 has fallen every month this year in February, consumer confidence index fell to its lowest point since 1996. Since 2002, consumers have been over-estimated the severity of inflation and unemployment, the European Commission's survey shows that consumers expect the unemployment rate at 9.5%, the actual unemployment rate was 8.6%, on expectations of rising prices higher than the actual level of 40%. The first quarter of this year, nominal wages increased by 3% than the same period last year, substantially higher than the level of growth in private consumption, so consumption is weak not because of reduced income, but from lack of consumer confidence. 2, investment is difficult to predict return to growth in the third and fourth quarter, the fixed capital formation decreased by 0.2% and 0.1%, significantly lower than the first quarter of 2001 to 2002 In the second quarter decreased 0.8% level, the basic momentum of decline in investment has been checked. However, the adverse impact of investment and a favorable factor with the opportunities and challenges. First, investment recovery reference Cen members missing, the investment slowdown was mainly due to slow down the momentum of the Italian and German investments have increased, Italy abolished the restrictions on investment laws, and increased business investment tax credit to stimulate investment growth; Germany suffered flood damage reconstruction of the infrastructure. Support for German, Italian investment growth factors also play a role in 2003, but the intensity will diminish. Second, the current manufacturing capacity utilization in the long-term average level, but different from the euro zone and the United States, the United States is the decline in investment over-investment in the late 90's the consequences of decline in investment in the euro area from the low productivity of capital and investment efficiency bad start does not necessarily bring higher recovery of investment growth. Again, more than two years the stock market downturn, some deterioration in corporate balance sheets, expanding production capacity will is not strong. Fourth, corporate financing conditions improved monetary policy in the euro area since 1999, the most relaxed period; After two years of adjustment, business began to improve profitability, labor productivity has increased; the euro appreciation of the euro area of ​​international capital flows, These factors are conducive to investment recovery. 3, Foreign Trade and struggling 2002, the economic recovery in the euro area external demand has played a large role in boosting economic growth in half from net exports. However, beginning in May, the euro was the rapid appreciation of the world's major currencies, except the Asian and Eastern European countries, other regional economic unsatisfactory, the fourth quarter of 2002, the euro zone's economic contribution of net exports turned negative rate is. This year, the euro continued to rise, early March, the euro against the dollar by the end of 2002 the level of appreciation of the $ 1.1 parity, than the average level of appreciation in 2002 of 16%, and 12 industrialized countries, the real effective exchange rate appreciation compared to 8% . Appreciation of the euro to euro area price competitiveness deteriorated in the first quarter, foreign demand, boosting the economy will be negative. 4, the euro's appreciation has little impact on the euro-zone economy exchange rate appreciation of the role of different channels of economic development. On the one hand, would undermine the price competitive advantage, reduce exports, increase imports; the other hand, can reduce the import prices, reduce inflation, lowering interest rates to stimulate domestic demand. Exchange rate appreciation on the economy is a blessing or a curse depends on the reasons for exchange rate appreciation and the consequent replacement of domestic demand and external demand conditions. If the euro is the result of U.S. monetary easing, then the euro-zone exports will be seriously affected, the euro zone interest rate cuts short-term stimulation of domestic demand could not offset the decline in exports, the euro zone economy will decline; if the euro's appreciation is due to U.S. current account deficit is too large, the dollar risk premium, investors demand for euro assets, then the appreciation of the euro will greatly stimulate investment and consumption increase, the euro zone economic growth outweigh the risks. From the current situation, the euro's appreciation is the result of many factors, both U.S. and European interest rate differentials increase and the U.S. current account deficit is too large the reasons, but also the crisis in Iraq as safe-haven currency euro, the euro depreciated over the U.S. economy the development of lower than expected and other reasons, but, in general, the euro currency and the currencies of major trading partners is still below 20 years compared to the average level of the euro's appreciation of the situation is welcome.