Global Economy To Turn

Source : The Straits Times, May 11, 2009

PARIS - GRIM data revealed the depths of distress in European industry on Monday but economists seized on strengthening signs of upturn in the months ahead.

The French and Italian data 'confirm that the sector is still in dire straits' and worsens the growth outlook for the eurozone. --PHOTO: AP

France and Italy reported a big slump in industrial output in March, but central bankers from the G-10 grouping of big economies meeting in Switzerland said the global economy was near a turning point.

Some countries were recovering, and declines in output were slowing elsewhere, they said.

'We are, as far as growth is concerned, around the inflection point in the cycle,' said European Central Bank head Jean-Claude Trichet.

The French state statistics agency INSEE reported a 1.4-per cent monthly fall in output, while in Italy the fall was much sharper: 4.6 per cent in March and almost 24 per cent on a 12-month basis, statistics institute Istat said.

In France 'the recession is going to continue, but it will probably be less severe in the coming months,' said analyst Frederique Cerisier of BNP Paribas bank, commenting on the new data.

Output from France's agricultural and food production sector dropped and the only major area of the economy to see growth was pharmaceuticals.

'Industrial activity continued to contract at the end of the first quarter at a relatively rapid pace, although slightly more moderate than during the last months of 2008,' Mr Cerisier said.

In Italy, production of textiles, metals and wood plunged, but manufacture of autos stabilised on a monthly basis, curbing several months of decline.

The French and Italian data 'confirm that the sector is still in dire straits' and worsens the growth outlook for the eurozone, said analysts at consultancy Capital Economics.

The OECD grouping of leading economies said on Monday that the downturn in some recession-hit countries was easing. Its key CLI economic indicator rose in recession-hit Britain and Italy and in France and non-OECD member China. The indicators in major member countries 'continue to point to deterioration in the business cycle, but at a decreasing rate,' the Organisation for Economic Cooperation and Development (OECD) said in a report. -- AFP