OUTLOOK Euro zone figures to show confidence on the slide again
Monday, November 22, 2004 7:58:18 AM
afxpress.com
BRUSSELS (AFX) - Euro zone figures due out in the coming week will show business confidence resuming its slide, reflecting concern over slowing growth and the strong euro, economists said
The key release for the week -- Germany's IFO business climate index for November -- is forecast to dip following last month's rise
"Last month, the IFO business climate index edged higher against forecasts of a decline," HSBC economists said
"In November, we expect the overall IFO business climate index to fall from 95.3 to 94.3, reflecting such factors as the rise of the euro and disappoint economic releases," they said
Bank of America economist Lorenzo Codogno agreed
"Following the significant decline in the ZEW index recorded in November, we think there is a good chance to see an equally weak IFO reading," Codogno said
"Slower global demand, domestic demand not picking up, higher oil prices and the sharp appreciation of the euro all combine to enhance the downward risk of the outcome of the IFO survey," he said
Belgium's closely-watched business confidence indicator for November is also forecast to have deteriorated markedly
"The business confidence index was unchanged last month. But we expected a renewed fall in the index on the back of the continued slowdown in Belgium's EU trading partners and further euro strength," Royal Bank of Scotland economists said
Equally, the forecasts for Italian business confidence in November just as gloomy
Royal Bank of Scotland economists noted that the Italian index stagnated last month, with slowing growth in the country's trading partners and high oil prices dampenening manufacturers' confidence
"These influences will have continued to weigh on confidence this month, as will the record high euro-dollar exchange rate," they said
Among other data, the breakdown of German GDP figures for the third quarter is likely to confirm slowing export growth in the euro zone's biggest economy
"The export boom in Germany is ending and we expect a sizeable shift in the net export contribution to GDP growth from a positive 0.5 pct in the second quarter to a negative 0.3 pct in the third quarter," Codogno said
"Consumption should have remained weak, posting a meagre 0.1 pct quarter-on-quarter rise," he said
HSBC economists agreed that "net trade generated a significant negative effect" in the third quarter
And Royal Bank of Scotland economists said the figures are "likely to show that the slowdown (in GDP growth) was due principally to flagging net exports"
They added that the "global soft patch and strong euro are finally taking their toll" |
