Southern Europe economic update

Southern Europe economic update

The Italian Government is trying to work out every possible solution to give acceleration to the economy, but the overall climate has not so far improved, indeed it has surely got worse. The government up to the present has promised to build the bridge over the strait in Messina originally dreamt of by the Romans emperors, allowed illegally exported capitals to be re-imported for a minimal fee without questioning, allowed all kinds of financial and white collar crimes to be washed by paying a fine. Inflation has slowed down and is now at 2.7%, however, since Italstat has changed the goods of reference in the basket, this number has hardly any connection with the previous numbers. After the auto subsidies expired in December, January showed once again a strong year on year contraction of 14%. This is not helping struggling FIAT which has bolted its position firmly on remaining independent and not divesting from any brands. Incredibly enough, Spain is now officially the locomotive of Europe considering it is the only country with a realistically possible growth above 1% for 2003. Unfortunately Spain, with a population of not quite 40 million and a GDP per capita of $16'400 (57 million and $21'000 for Italy respectively) does not have the strength to really move Europe towards a brighter future. Real estate prices are skyrocketing but construction projects are still down 18-20% dragging down the tubers' business dramatically. Germany and France are coveted export markets for Spanish tubers, but those economies are struggling just as much. Worse yet, the predilection of Spanish buyers to work strictly with prime material compared to Italian buyers who are happy as long as the coil contains Fe, C and Si, puts them at a definite price disadvantage. White goods and automotive sales are down for January and projected numbers for the year are down while expected unemployment is up.