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International News Title: Growth outlook for eurozone worsens High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/9b29b0da-0b85-11e1-9861-00144feabdc0.html#ixzz1dLjOAc2w The scale of the economic challenge facing the eurozone was underlined on Thursday by a new report predicting slower growth and higher levels of debt in the 17-country trading area. As the political elites in Greece and Italy struggled to agree new governments under intense pressure from capital markets, the Brussels-based European Commission lowered its forecasts for next year’s economic growth in the single currency bloc to 0.5 per cent from the 1.8 per cent it foresaw in the spring. The European Union’s executive body said sovereign debt levels in the eurozone would increase next year by more than previously thought, reaching 90.4 per cent of overall gross domestic product, up 88 per cent this year. A separate monthly bulletin from the European Central Bank of professional forecasters compounded the warning. It showed predictions for eurozone growth next year had halved to 0.8 per cent. “Growth has stalled in Europe and there is a risk of a new recession,” said Olli Rehn, the commission’s economic chief. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/9b29b0da-0b85-11e1-9861-00144feabdc0.html#ixzz1dLjTIuTS The gloomy predictions came amid growing evidence that the eurozone’s economic troubles were damaging the prospects of the global economy. The growth of Chinese exports to the EU slowed to an annualised rate of 7.5 per cent in October, down from 9.8 per cent in September. This contributed to a deceleration of export growth from the world’s second-biggest economy to 15.9 per cent year-on-year from 17.1 per cent a month earlier. Indonesia’s central bank unexpectedly slashed its key lending rate by 50 basis points on Thursday, accelerating monetary easing by Asian central banks in the face of slowing growth and the impact of Europe’s debt crisis. Lee Hsien Loong, Singapore’s prime minister, warned on Thursday that “the clock is ticking” on Group of 20 efforts to address the world’s economic malaise. ”I think all the [G20] ministers know that they have to do a lot more work and more action needs to be taken because they have to make sure that the problem does not spread beyond Greece and cause a run on Italy, for example, which would have an implication for the whole world.” The outcome of days of high drama in Rome and Athens remained unclear. Silvio Berlusconi, the Italian prime minister who promised on Tuesday to resign after parliament passes economic reforms, appeared increasingly isolated within his party and was expected to give up his push for early elections. There were reports that the billionaire premier would lend his reluctant support to a caretaker government led by Mario Monti, former European commissioner. In Greece after days of acrimonious talks between the key political parties, the office of the president announced that Lucas Papademos, a former ECB vice-president, will be the new prime minister. The government will be faced with trying to implement reforms that are part of a €130bn bail-out agreed by the EU last month in the face of unrest from a Greek population already hard-pressed by austerity measures. “The agreement to form a government of national unity opens a new chapter for Greece,” José Manuel Barroso and Herman Van Rompuy, the EU’s two presidents said in a joint statement, adding that the new government’s “workload will be extremely intense”. Markets were once again volatile in the European morning, although the FTSE Eurofirst 300 equities index reversed early losses to rise by 0.7 per cent. The Asia-Pacific region declined by more than 3 per cent, following a 3.7 per cent plunge on the S&P 500 US index on Wednesday. Yields on Italy’s 10-year bonds – whose spike on Wednesday above 7 per cent sent panic through markets and European capitals – fell back after the European Central Bank was reported to be intervening. The more upbeat mood was helped by an Italian bond auction. Rome managed to sell €5bn of 12-month bills but was forced to offer a yield of 6.09 per cent, the highest level for an auction of this maturity since January 1997, according to data from Reuters. Siemens, the German industrial conglomerate whose broad base of interests makes it a bellwether of European economic conditions, on Thursday said it expected moderate revenue growth in 2012 but cautioned that earnings would level off amid pricing pressures and higher operating expenses. In a sign of the exposure of Europe’s financial insitutions to sovereign debt, France’s Crédit Agricole reported a 65 per cent drop in third-quarter net profits, after taking a bigger-than-expected hit on Greek sovereign bonds.
Poster Comment: The EU is collapsing. Unfortunately- thanks to "Helicopter Ben" Bernanke- we're joined at the hip with the EU. When the headlines say that Euro is dead, we'll have a matter of weeks, before the force-5 hurricane hits the USA. You ain't seen nuthin, yet...
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