Blog: Europe's 2004 outlook
Dave Leggett | 13 June 2003
The European Central Bank - which sets interest rates in the eurozone - is making it clear that it is becoming less concerned about inflation and more about the dangers of Japanese-style price deflation, especially in Germany. The German economy is a worry right now. As this week's just-auto 'Feature of the Week' points out, opinion is divided on how the German car market will develop. There could be some uplift from replacement demand later this year. And new models - like the Golf - will be helping to lift sales next year too. But the current economic weakness is unsettling. Eurozone interest rates at a record low 2% may come down even further. The strong euro versus the dollar ain't helping the continental European economy either. And the fundamental causes of that exchange rate shift don't look like changing anytime soon.
European consumers will likely remain cautious for some time to come. Thin margins on vehicle sales in Europe could get even thinner next year as competition intensifies in a stagnant market.
Could things be even worse? Iraq is still a mess and worries over international terrorism haven't exactly gone away, but yes, I suppose things could be even worse. Cold comfort.
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