Economic Crisis in Europe

The world crisis that just about every country in the world has been battling against has produced many rather unflattering economic statistics and financial visions. It has hit all areas of the economy and has negatively impacted all social classes. Its destructive power can best be seen in the drop in industrial production, weakened energy supplies, reduced consumer demand, rising unemployment and lower remuneration of employees and people working on a base of outsourcing. Simply put, the time has come when planned investments should be reconsidered and risk action avoided.

At the end of last year the EU Commission came up with a coordinated response to the deepening economic crisis and suggested that EUR 200 billion be invested in measures to improve consumer purchasing power, generate jobs and stimulate growth.

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Of this total, EUR 170 billion (SKK 5120 billion) for economic incentives should come from the Member States, while the remaining EUR 30 billion (SKK 903.78 billion) should be covered equally by the EU budget and the European Investment Bank (EIB). This set of short and long term measures represents 1.5% of the Union’s GDP to be used for recovery of economies, accounting for the initial position of individual countries. The European Commission does not project with the adoption of equal measures in all Member States, but it is aiming for a coordinated approach.

Slovakia has allocated EUR 332 million (SKK 10 billion) for government anti-crisis measures at present. The Ministry of Finance plans to obtain the funds from savings in state consumption. On 1 March 2009 a package of anti-crisis measures to support employment will enter into force.

Industrial Production in Figures
According to the Statistical Office of the European Commission – Eurostat, overall industrial production in the European Union decreased by 2.3% in December. With a decrease of 12.7% Slovakia occupied an unenviable first place among the European Union countries.

After Slovakia, the second largest monthly decline of 10.2% was observed in Ireland, while Romania took third place with 8.6% and Germany fourth with its 4.9%. The only EU state to post a growth in industrial production was Lithuania, where the increase came to 1.1%.

Annual statistics show that industrial production in the European Union has decreased by 11.5 %. In comparison with 2007 the most significant drop of 20.7% was observed in Estonia, followed by Spain with 19.6% and Sweden with 18.4%.

In December the annual production in Slovakia fell by 16.8%, and in November 2008 Slovak production posted an annual decline of 7.2%.

Rising Unemployment
The economic crisis is visibly reflected in labour market statistics and affects all EU countries as well as non-member states.
As stated in the Eurostat statistics from December, the unemployment rate reached 7.4% in the whole EU in December, which is an increase of 0.1% when compared to the previous month. The annual increase in unemployment was 0.6%. The unemployment rate within the euro area increased from 7.9% in November to 8.0% in December, but the year-on-year increase was 0.8%.

Since May 2008 Spain has posted the highest unemployment figures and its unemployment rate reached 14.4% in the last month of 2008. Latvia with 10.4 % ranked second and Slovakia third.

The lowest number of unemployed people last month was recorded in the Netherlands (2.7%) and Austria (3.9%). The greatest annual decrease was observed in Poland (from 8.2% to 6.5%) followed by Slovakia (from 10.3% to 9.4%). On the contrary, the most significant increase was recorded in Spain (from 8.7% to 14.4%).

Purchasing Power in Slovakia on the Rise
According to Eurostat statistics from December, annual retail sales within the European Union decreased by 0.8% in December, but remained unchanged when compared on a monthly basis. The annual drop in retail sales in the euro area was 1.6% within the monitored month, but has remained equally stable on a monthly basis as was the case in the EU.

Retail sales showed an annual increase in four countries and a fall in fourteen. The greatest increase in sales was recorded in Poland (4.6%) and Slovakia (3.2%). The most significant decrease in retail sales was observed in Latvia (16.9%), Estonia (13.2%) and Denmark (9%).

In the last month of last year retail sales increased by 3.2% in comparison with the previous year and Slovakia therefore ranked second among EU countries. Retail sales in Slovakia also increased by 1.3% on a monthly basis, which again placed Slovakia second.
Even though statistical data are not the most favourable, individual governments are currently adopting measures to revive markets and economies in order to contribute to the recovery of a stable economy in individual countries.

By Beata Pašková
Photo: European Communities, 2009

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