Europe to Lag Global Growth on Aging Population, Labor Costs
July 12 (Bloomberg) -- Henkel KGaA Chief Executive Ulrich Lehner said in February the fastest global growth in four years would boost the European economy and increase sales of his company's Persil detergent and Schwarzkopf shampoos.
On July 6, the 128-year-old company cut in half its forecast for sales growth as ``ongoing sluggish demand'' in its home market spreads across Europe. Two days later Carrefour SA, Europe's largest retailer, said first-half sales at its French hypermarkets fell and on Friday L'Oreal SA, the world's largest cosmetics maker, said revenue in Germany, France and Italy has stagnated.
Five years after the euro currency's introduction, the region's economy is lagging the U.S. for the 11th year in 12 and the pace of growth is dwindling for a fourth decade. Companies, including tiremaker Continental AG, are moving jobs abroad, government efforts to boost growth have been hobbled by slumping popularity and a shrinking workforce is boosting welfare costs, further depressing economic expansion.
``Europe will lag the rest of the world for the next 15 years,'' said Philipp Vorndran, chief strategist at Credit Suisse Asset Management in Zurich, which has $241 billion in assets under management in Europe, in a telephone interview. ``Growth of 1.5 percent to 2 percent is what we have to expect over the coming years -- and the trend is pointing down.''
The Paris-based Organization for Economic Development and Cooperation estimates the region's potential growth -- the rate at which the economy can grow without fueling inflation -- at 2 percent, compared with 2.7 percent in the 1980s and 3.2 percent in the U.S. Vorndran said the euro region's potential rate may fall to between 1 percent and 1.5 percent over the next two decades. |
