Too Good To Last

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Too Good To Last

  1. 1. Ingrit Kerge
  2. 2. <ul><li>From The Economist </li></ul><ul><li>Date: May 15th 2008 </li></ul><ul><li>About the euro-area economy </li></ul>
  3. 3. <ul><li>A credit crunch </li></ul><ul><li>GDP (Gross Domestic Product) </li></ul><ul><li>Inflation </li></ul><ul><li>ECB (European Central Bank) </li></ul>
  4. 4. <ul><li>A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks </li></ul>
  5. 6. <ul><li>Rising food and petrol prices reduced consumer spending </li></ul><ul><li>Firms were working through order books fattened by resilient export demand </li></ul>
  6. 7. <ul><li>The first quarter was strong. </li></ul><ul><li>GDP rose at an annual rate of 2.8% </li></ul><ul><li>Solidity in the north </li></ul><ul><li>Fragility in the south </li></ul>
  7. 8. <ul><li>In Germany: confidence dropping in April to its lowest in more than two years </li></ul><ul><li>In France: confidence which had briefly flowered, wilted as well </li></ul><ul><li>In Italy: firms have sunk further into gloom </li></ul>
  8. 9. <ul><li>The euro area inflation is likely to stay above 3%, well over the ECB target range of below 2% </li></ul>
  9. 10. <ul><li>Bank loans to households are decreasing </li></ul><ul><li>Bank lending to firms is still active </li></ul>
  10. 11. <ul><li>The Spanish economy is the clearest victim of the credit crunch, just it was the main beneficiary of the credit boom </li></ul><ul><li>Spain is weighty enough – and its slowdown sharp enough - to do much harm to the euro area economy </li></ul>
  11. 12. <ul><li>The worst of the credit crunch may be in the past, but there are tougher times ahead for the euro area economy </li></ul>

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