.comment-link {margin-left:.6em;}
Visit Freedom's Zone Donate To Project Valour

Friday, February 13, 2009

European GDP Q4

Update: WTI Cushing spot edges below $34. The game's afoot. End update.

I feel somewhat subdued this morning. I woke up to news of the Buffalo crash.

European GDP doesn't lift the mood. -1.2% from Q407 to Q408 for a 12 month drop. European GDP fell 1.5% in the fourth quarter. This is much worse than the 90-91 recession. The figures are the same for the 15 and 27 country zones. Industrial production fell 2.6% in the 15 country zone and 2.3% in the 27 country zone. Bloomberg. Eurostat.

Germany did even worse, dropping 2.1% in the fourth quarter. France slid 1.2%. Italy, -1.8%. Spain -1.1%.

The above are quarterly rates. The formula to annualize a quarterly rate is 1 + the quarterly rate, to the power of 4, and then subtract 1, so:
  1. -1.1% annualized = -4.33%
  2. -1.2% annualized = -4.71%
  3. -1.5% annualized = -5.87%.
  4. -1.8% annualized = -7.10%
  5. -2.1% annualized = -8.14%.
Thus Europe is contracting considerably more than the US, which explains why Chinese exports to Europe are falling faster now than exports to the US. This is terrible, terrible news for the European banks, because the expectation for European loan performance is much worse. Dubai is supposedly renegotiating some of its loans.

For the euro region, “we see at least another three quarters of contraction, and we should brace for a huge rise in unemployment,” BNP’s Wattret said. “The ECB will cut by at least half a point next month and may have to consider something even more radical.”
Yeah, I'll say. The ECB has been dragging its feet all through this. They need to try to get out ahead. Cut rates and they should cut fuel taxes. They have to recover income quickly now in old Europe.

This is also bad news for US manufacturers!

I am not very positive on the emerging economies either. India's December industrial production fell 2% on a YoY basis.

Comments: Post a Comment

Links to this post:

Create a Link

<< Home

This page is powered by Blogger. Isn't yours?