Diverging economic performances across EU

Cembureau has recently published its 1Q report, which is available to download here. Highlights from the report are included below:

• Further to the improvement in the macroeconomic and industrial environment that was observed over the second half of 2013, real GDP growth in 1Q14 remained in positive territory in the EU (0.3%), albeit rather weakly, with economic performance continuing to diverge amongst individual countries. Germany (0.8%) continued to outperform all other major European economies. France stagnated as GDP growth was flat, whilst Italy and Spain recorded opposite performances: in the former GDP dropped by -0.1% after an equivalent increase in 4Q13, while in the latter the growth rate was positive for the third consecutive quarter (by 0.4%), albeit corresponding to a 0.2% drop on a yearly basis.
• Other key macroeconomic indicators signal unemployment rates remain very high in historical terms, albeit slightly declining (10.4% in April vs 10.6% in February 2014, the peak being still Spain with 25.1%), whilst the latest data on the consumer price index revealed further decelerating inflation rates (0.6% year-on-year in May 2014 in the EU, 0.5% in the euro area). These price developments have raised concerns regarding possible deflation scenarios in the EU and - coupled with the fragility of the economic recovery - have led the ECB to decide to lower its key interest rates down to the record low of 0.15% on 11 June 2014. On the same day, the expansionary monetary policy stance has been complemented by the announcement of unprecedented ECB actions, such as the deposit facility into negative territory (-0.10%) plus targeted longer-term refinancing operations (TLTROs) aimed at improving bank lending in the euro area. Finally, the ECB announced preparatory work related to outright purchases of asset-backed securities (ABS), somewhat modelled along the Quantitative Easing programme that has been carried out by the Federal Reserve in the US to feed the economic recovery.
• The recovery in industrial production in 1Q2014 gained momentum in Germany and Spain. Industrial production lost ground in France and remained unchanged in Italy around very low levels in historical terms.
• Leading indicators for construction activity in 1Q2013 (construction production index and construction investment) signalled a recovery in the EU as a whole, Germany and Spain. The speed of the recovery in construction activity in these economic areas was even more unexpected as the first quarter of the year is traditionally subdued according to the seasonal pattern. On the other hand, a second consecutive fall was recorded in France, and no substantial improvement was seen in Italy. In 1Q14, cement manufacturing production indices have revealed the same picture, i.e. quite diverging performances amongst the countries observed.
• The construction sector in the EU in 1Q14 continued to be affected by conflicting factors. On the one hand, the private sector (residential and non-residential subsectors) benefited from interest rates being at record lows, but suffered from the continued stagnation in real incomes that continues to curb demand for new housing and residential construction activity. As far as civil engineering is concerned, major unsupportive factors, primarily austerity measures and cuts in government spending, remain in place.

Click here to download the full report.

Source: Cembureau press release, adapted to house style by Katherine Guenioui

Read the article online at: https://www.worldcement.com/europe-cis/08072014/diverging_economic_performances_across_eu_46/