Rabobank Group

7-1-2010 | Economic news

At the start of this new year, economic developments in the last couple of months in 2009 are starting to become clear. Four of the euro area’s 5 largest economies have left behind the recession, and will grow for a second or third quarter running in the 4th quarter of last year. Spain is clearly lagging behind. For all countries, many factors can be identified that will make for a relatively timid further recovery in 2010.

Germany – Start of an uncertain new year!
Industrial production is expected to pick up again in the last two months of 2009. However, German firms will continue to suffer from the banking sectors’ shift to thrift. Tight credit conditions together with falling profit margins suggest that the number of bankruptcies will rise further this year. As such, consumers are fretting about their job prospects even though the labour market has remained resilient.

France – Une bonne année?
After the economic misery of the past year, France has hopefully seen the dawn of a happier year now. In this respect, the anticipated continuation of the shaky recovery of the last half of 2009 is a vital factor. The government has ample New year’s resolutions but sentiments in the private sector are very variable. Uncertainty will therefore remain the key word in 2010.

Italy – 2010 will be a tough year
The Italian recession has ended, but 2010 will be a tough year nonetheless. Economic growth in 09Q3 was largely based on private consumption and investment in stocks, both factors exhibiting only temporary strength. The contraction of employment and moderation of wage growth has so far remained relatively modest. An improvement in export price competitiveness is thus not easily attainable, which complicates a strong, export-led recovery.

Spain – Mediocre close of 2009
The available data for the fourth quarter of 2009 paint a sorry picture of the Spanish economy. Industrial production hasn’t contracted in months, but has been unable to lift itself of the bottom that has been reached. After a good summer consumers have thrown in the towel again. House prices continue their downward path and Standard & Poor’s changed her rating outlook from stable to negative. 

The Netherlands – A sober recovery
The Netherlands is officially out of recession, but with an expected meager GDP growth rate of 1% in 2010 the recovery will be a sober one. The greatest grounds for hope to the Dutch economy lie in the recovery in world trade. Dutch exporters benefited in recent months from increased worldwide demand. Consumption will remain subdued in 2010 as a result of declining purchasing power and rising unemployment.

The Rabobank Economic Research Department follows, analyses and predicts financial and economic developments in the Netherlands and around the world.