yep, just watch the dollor
strong Euro can finish EU off once and for all, LOL
Italian Business Confidence Unexpectedly Falls as Manufacturing Stagnates
Dec. 22 (Bloomberg) -- Italian business confidence unexpectedly fell in December to a five-month low as the euro's rise to a record against the dollar weighed on exports and manufacturing stagnated.
An index based on a survey of 4,000 executives fell to 91.2 from a revised 94 in November, the government statistics office said in Rome. The index was expected to rise to 95, according to the median forecast of 18 economists polled by Bloomberg News.
``The euro's strength is starting to get scary,'' said Renzo Belcaro, chief executive officer of car-finishings maker Silmet SpA and president of an association of 4,500 small and medium- sized companies in northeast Italy. ``If we don't export, we're dead.''
Italy, the third largest of the 12 economies using the euro, is struggling to recover from its first recession in almost a decade as the currency's appreciation makes it harder for companies such as Fiat SpA to sell to foreign customers.
The euro set a record of $1.2448 today and bought $1.2435 at 1 p.m. in Rome. The currency has risen 18 percent against the dollar this year, hampering Europe's recovery from the slowest economic growth since 1993.
Pessimism among Italian manufacturers contrasts with evidence of a rebound in Germany, Europe's largest economy. German business sentiment posted its eighth gain in a row in December, a survey last week showed. Germany returned to growth in the third quarter after factory orders improved and production rose twice as much as economists had expected.
Expensive Euro
The five-year-old euro's rise poses ``remarkable difficulties to the speed of recovery,'' European Commission President Romano Prodi, a former Italian prime minister, said last week. Italian exports outside the European Union fell almost 11 percent in November.
Fewer Italian manufacturers plan on boosting production in the next three months, Isae said. Inventories rose, and foreign demand fell. An index measuring orders from abroad dropped to minus 17 from minus 14 in November, a sign the increased value of the euro is squeezing exporters.
The survey coincides with growing woes at Parmalat Finanziaria SpA, Italy's biggest food company. Parmalat may file for bankruptcy protection as early as today after admitting that a 4 billion-euro ($5 billion) bank account didn't exist, people familiar with the situation said.
Parmalat failed to pay investors 150 million euros of bonds, Standard & Poor's cut its credit rating to below investment grade and founder Calisto Tanzi resigned as chairman. Parmalat's financial troubles put 36,000 jobs at risk.
Pessimism
``2004 isn't going to be an easy year,'' said Giovanni Burani, chief executive of Mariella Burani Fashion Group SpA, owner of the Mila Schon fashion label, in a televised interview with Bloomberg News.
Italy, which emerged from recession in the third quarter, faces other obstacles to a recovery. Labor unrest kept production unchanged in October. In Germany and France, Italy's two biggest trading partners, production jumped in the same month.
Plans by Prime Minister Silvio Berlusconi to force Italians to work longer to collect a full pension have triggered nationwide protests. Earlier this month, more than 1 million demonstrators took to the streets of Rome.
An October general strike forced Alitalia SpA to cancel flights and thousands of workers at Fiat didn't show up to work. The lower house of parliament had to vote confidence in the government three times to pass Italy's 2004 budget to the Senate for final approval.
Coalition Turmoil
``Obstacles keep standing in the way of Italy's recovery,'' said Alessandro Truppia, chief economist at Aletti Gestielle Sgr in Milan. ``There are still lots of problems the country needs to address.''
While Berlusconi's House of Freedoms coalition has the largest majority in parliament since World War II, two of the four parties in the alliance are pushing for a cabinet reshuffle in January. The divisions, which stretch from pension spending to voting rights for immigrants, have held up legislation.
Growth in the euro region is likely to slide to 0.4 percent this year, the European Commission forecasts. The fastest growth in almost two decades in the U.S., the destination of a tenth of Europe's exports, has lifted expectations of a rebound in Europe. The European economy grew 0.4 percent in the third quarter, a fifth of the pace of the U.S.
Belgium, France
Business confidence in Belgium and France probably rose this month, economists said. Belgium's index probably increased to minus 5.7 from minus 9.4, according to the median forecast of seven economists. The Belgian central bank releases the report at 3 p.m. tomorrow in Brussels.
France's business confidence index, to be released at 8:45 a.m. Wednesday, probably rose to 102 from 100 in November, according to the median forecast of 17 economists.
The Isae statistics office surveyed Italian mining and manufacturing companies from Dec. 1 and Dec. 18, asking about production, orders, inventories, prices and jobs. Its business confidence index, which is adjusted for seasonal variations, peaked at 116 in 1973. The low was 53 the following year.
The November index was revised from 94.4.
Last Updated: December 22, 2003 07:04 EST |
