Europa könnte die Amis überholen !

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Europe Looks to Outgrow America
Old World Confident of Immunity to U.S. Economic Downturn --for a Change http://www.stock-channel.net/Board/smilies/smile.gif

By William Drozdiak
Washington Post Foreign Service
Sunday, January 14, 2001; Page H01

BRUSSELS--Over the past decade, much of the world came to rely on the United States as the locomotive that would propel global economic growth. The insatiable American market for imports from Asia and Latin America restored vitality on both continents and spurred rapid recovery from brushes with financial disaster.

But in Europe, the arduous quest to build a unified market and create a common currency has made Old World nations much less dependent on American customers to ensure their prosperity. And now that the Great American Boom is losing steam, Europe stands to suffer less than perhaps any other part of the world from the slowing U.S. economy.

Much of Europe's trade -- as much as 80 percent of total commercial exchanges -- is done within the euro-zone that encompasses 12 countries. As a result, Europe seems relatively immune to the economic slowdown afflicting the United States and Asia. The European Commission estimates that the 12 countries now earn little more than 2 percent of their national incomes from exports to the United States.

So while the United States struggles to regain its dynamism, Europe is basking in an unusual role as a haven of relative stability. For the first time in a decade, many analysts say, the growth rate in Europe for 2001 is likely to surpass that of the United States. http://www.stock-channel.net/Board/smilies/smile.gif

"It used to be the case that when the United States caught a cold, Europe got pneumonia. But those times are over," said Jean-Claude Trichet, the Bank of France governor who is expected to be the next chairman of the European Central Bank. "Europe and the United States are no longer in the same situation. . . . The European outlook, barring proof to the contrary, is one of growth. In the United States, there are signs of a fairly considerable slowdown."

Europe's bullish outlook is reflected in the recent shift in the value of the euro, the single currency embraced by 12 nations in the European Union. Only two months ago, the euro looked like a basket case, requiring several interventions in currency markets by the world's central banks to prevent a free fall against the dollar.

But since then, the euro's value has risen from a low of 82 cents to just over 95 cents today. While the euro remains significantly below the $1.18 it commanded when it was launched two years ago, many experts think it has such strong momentum that it will soon reach parity with the dollar.

The euro's ascendancy has much to do with doubts about the health of the U.S. economy, but it also demonstrates growing faith among investors in Europe's prospects. Several factors explain the brighter outlook: substantial tax cuts in Italy, Germany and France; a significant drop in oil prices from their recent peaks; a flurry of successful corporate restructurings; and the best employment figures in recent memory.

A new ebullience among consumers and business leaders has replaced the gloom of the Euro-sclerosis that hung over much of the continent in recent years. In contrast to the United States, Germany, France and Italy had record retail sales during the holidays. In the Netherlands, the prominent retailer Royal Ahold announced that last year's sales figures were more than 50 percent higher than the year before, thanks partly to the strong holiday season.

Europe appears well positioned to weather turbulence in the global economy for a number of reasons. Unlike the United States, household and corporate debt remain low. And only an estimated 5 percent of European personal wealth is tied up in the stock market, compared with 25 percent of U.S. personal wealth, according to the European Commission. Therefore, experts say, European consumers may be less likely than their American counterparts to cut back on spending in reaction to a sharp drop in stocks.

"We in Europe are much less exposed to a downturn because equity markets, household savings and trade deficits stayed at relatively normal levels," said Julian Callow, senior economist with Credit Suisse First Boston in London. "The strong sales over Christmas provide another clue that European consumption is likely to be more confident going forward than in the United States, where the rate of expansion has slowed substantially."

The European Commission projects that Europe's economy will grow by 3.2 percent this year -- just below last year's 3.5 percent, its best performance in eight years. Meanwhile, U.S. economic growth is expected to drop from 5 percent last year to 3 percent or less this year.

Economic strength in Europe has drawn much of its buoyancy from growing exports, which became much more competitive in foreign markets because of the weak euro. For instance, as leading U.S. automakers Ford and GM endure slumping sales, German car companies Volkswagen, Porsche and BMW have been racking up record profits thanks to sales abroad.

But now that the euro has jumped by 15 percent in value and threatens to move higher against the dollar, some European companies worry that their share of export markets could start to diminish. That, however, would be more than offset by the benefits of a strong euro -- which brings down the cost of oil and other imports. That, in turn, would help control inflation and provide greater flexibility to the European Central Bank to cut interest rates when it needs to spur the economy.

Traders say the heavy pressure on the euro that drove down its worth during much of the past year has vanished. European investors have started pulling money out of American securities with the slowing of the U.S. economy, and European companies no longer seem interested in pursuing acquisitions that required them to swap billions of euros for dollars. And with nervous global capital looking for a comfort zone, Europe looks like the safest refuge.

"There's no money going into the United States so the dollar is obviously going to continue to weaken," said Lee Ferridge, head of global currency strategy at Rabobank International. "And why would anybody want to put money in Japan? There's no return on bonds or short-term deposits, and stocks just keep falling."

Some of the biggest beneficiaries of Europe's rosier economic prospects could be American companies that do a lot of business on the continent. Just a few months ago, the weak euro cut deeply into earnings by U.S. companies such as DuPont, Oracle, Eastman Kodak and Gillette, which depend on the European market for between 20 and 40 percent of their global sales.

But as the euro gains strength, many U.S. companies expect European customers to pull them out of the doldrums. At Gillette, which lost $185 million in the first nine months of last year because of unfavorable exchange rates, the euro's rise against the dollar in the last quarter is regarded as "a very promising development" that could bolster profits at a difficult time, company spokesman Eric Krauss said.

At Oracle, the world's No. 2 software maker -- which does one-third of its business in Europe -- the euro's rally is cheered as an antidote to the sharp loss in value against the dollar last fall that seriously crimped profits.

"The period of September to November was about as extreme as we've seen in terms of an earnings drag caused by currency swings," said Oracle's chief financial officer, Jeffrey Henley.

There are additional structural reasons why Europe is finally becoming more competitive in the global economy. In the past three years, unemployment has fallen across Europe from 12 percent to less than 9 percent as labor markets became less rigid and unions modified wage demands. While that is still more than twice the American unemployment rate, it represents a significant drop that has provided governments with enormous savings in welfare p