Money Buzz! Europa

Category: Economy

  • Global consumer spending to plunge by 8.6% to $44.3trn in 2020

    Global consumer spending to plunge by 8.6% to $44.3trn in 2020

    According to data presented by StockApps, the coronavirus outbreak is expected to cut global consumer spending to $44.3trn in 2020, an 8.6% plunge year-over-year.

    Falling consumer spending has significant effects on overall Gross domestic product (GDP) growth, considering it accounts for almost 70% of GDP.

    Before the COVID-19 crisis, global consumer spending has witnessed steady growth for five years in a row, revealed Statista, IMF, United Nations, World Bank, and Eurostat data.

    In 2015, it amounted to over $41.5trn. Over the next twelve months, this figure rose to $42.5trn and continued growing. Statistics show that in 2019, consumers worldwide spent a total of $48.5trn, the highest amount in a decade.

    However, the coronavirus crisis triggered a sharp fall in 2020, with global consumer spending expected to plunge by $4.2trn year-over-year.

    Nevertheless, statistics show the following years are set to witness a recovery, with consumer spending growing by 20% to $53.5bn in 2022.

    Switzerland is the leading country globally in consumer spending per capita

    Statista data also revealed that Switzerland represents the leading country globally, with over $40,000 in consumer spending per capita in 2020.

    Luxembourg ranked second with around $5,000 less than that. Iceland, Denmark, and Norway follow, with $34,300, $25,800, and $25,600, respectively.

    60% of Consumers Changed their Shopping Behaviour

    The McKinsey&Company survey showed consumers became increasingly cautious with their spending in 2020. Even after countries lifted lockdowns, many consumers still see their incomes fall, forcing them to reduce budgets and change shopping habits.

    Statistics show that increased time spent indoors led to significant growth in consumer spending on groceries, household, and home entertainment. Brazil, South Africa, and India lead in this category, with up to 30% consumer spending growth.

    Major consumer markets like the United States, United Kingdom, Germany, and China witnessed around 15% grocery shopping growth in the first half of the year.

    2020 has witnessed a plunge in clothes and accessories, outside entertainment, services, travel, and transportation spending. Respondents in all countries said they cut down spending in these categories between 20% and 50%.

    60% of consumers globally have tried a different brand

    The McKinsey survey also revealed the COVID-19 outbreak triggered a significant change in the shopping mindset.

    More than 60% of consumers globally have tried a different brand or shopped at another retailer during the crisis, mostly for convenience, value, and quality.

    In China and the United States, over 75% of consumers reported trying a new shopping method, and 60% plan to stick with it post-crisis.

    The United Kingdom and Germany follow with 71% and 54% of consumers who practiced new shopping behavior. In Japan, where lockdowns weren’t imposed, only 33% of consumers changed their shopping mindset.

  • OTP is suing Croatia for the forced conversion of Swiss francs loans

    OTP is suing Croatia for the forced conversion of Swiss francs loans

    OTP Bank announced on Monday that it has sued the Croatian government to recover losses of about 224 million kuna ($ 34.60 million).

    The bank recorded this losses after the introduction of a law that denominated Swiss francs loans in euro loans in 2015, Reuters reports.

    OTP is one of the largest banks in Croatia and the largest independent banking group in Central Europe.

    According to the Hungarian banking group, Croatia has violated the Investment Protection Treaty between Hungary and Croatia and has decided to initiate arbitration proceedings at the International Center for the Settlement of Investment Disputes (ICSID) at the World Bank.

    About 55.000 Croats have loans denominated in Swiss francs worth about 25 billion kuna ($ 3.73 billion). Most of these loans were contracted in the 2000s, when many people in Central and Eastern Europe were attracted to low interest rates on franc loans.

    In the meantime, however, the significant appreciation of the franc has led to rising costs of repaying loans in francs, and governments in the region have begun to look for solutions to the problem.

    In September 2015, the Croatian Parliament approved a law which allows the conversion of loans denominated in Swiss francs into euros, ignoring threats from banks, which warned that they would challenge the law at ICSID.

    The law allowed the conversion into euros of loans worth $ 3.4 billion to help citizens cope with repayment. The costs of the conversion were to be borne by the banks.

  • Pandemic to trigger $4 trillion loss in global real GDP in 2020

    Pandemic to trigger $4 trillion loss in global real GDP in 2020

    Data presented by Buy Shares indicate that the global economy is projected to lose $3.94 trillion in real GDP. The loss will be recorded across 2020 mainly due to the coronavirus pandemic.

    According to the data, the ten most impacted countries will cumulatively lose $696.56 billion in real GDP.

    The United States is projected to be the most hit country with a loss of $178.4 billion followed by Japan at $86.78 billion while the United Kingdom will be the third most impacted country at  $74 billion.

    France is fourth at $73.34 billion while India will be the fifth most impacted at $71.73 billion.

    Other countries to record massive losses in real GDP include Italy ($58.70 billion), Germany ($55.69), Brazil ($36.06 billion), Russia ($33.27 billion), Mexico ($32.31 billion), Canada ($27.92 billion) and South Korea ($3.76 billion).

    From the research, China is the only country set to register positive growth in real GDP at $51.12 billion.

  • Total EU fish catch in 2019 at 4.1 million tonnes live weight

    Total EU fish catch in 2019 at 4.1 million tonnes live weight

    The total EU fish catch in 2019 was about 4.1 million tonnes live weight. Spain’s fishing fleet accounted for about one fifth of all EU catches (0.8 million tonnes), Eurostat reports.

    A little more than one quarter of the EU total is coming from the combined catches of Denmark (0.6 million tonnes) and France (0.5 million tonnes).

    70% of the total EU catch was taken in the Atlantic, Northeast area

    The key species caught in the Atlantic, Northeast area were small fish such as herring (21% of the live weight caught in this region), sprat (15%), blue whiting (10%) and mackerel (8%).

    About one fifth of the EU’s total live weight catch in this area was made by the fishing fleet of Denmark (22%), with a further one quarter coming from the combined catches of France (14%) and the Netherlands (11%). 

    About 11% of the total EU catch was taken in the Mediterranean and Black Sea, the key species caught being sardines (24%) and anchovies (17%).

    Two-fifths of the total EU catch in this region was made by Italy (40%), with Greece (19%), Spain (17%) and Croatia (15%) accounting for the vast majority of the rest.

    About 7% of the total EU catch was taken in the Atlantic, Eastern Central area.

    The main catches in this area were skipjack (20%) and yellowfin tuna (17%), sardines (14%) and mackerel (13%).

    Among Member States, Spain (37%) and Lithuania (21%) accounted for the majority of catches, with much of the rest being made by the fleets of France and Latvia.

    Almost 7% of the total EU catch was taken in the Indian Ocean, Western area.

    Fishing here was focussed on tuna; 96% of the total live-weight caught by the EU fishing fleet was tuna, particularly skipjack, yellowfin and bigeye.

    More than two-thirds of the EU total catch was by Spain (70%), and most of the rest by France (27%).

    Only 5% of the total EU catch was taken in three remaining marine areas

    The main species caught in these areas were the following: hake (72% of the EU’s area catch) in the Atlantic, Southwest area; blue sharks (42% of the EU’s area catch) and skipjack tuna (14%) in the Atlantic, Southeast area; and redfish (38% of the EU’s area catch), cod (20%) and halibut (17%) in the Atlantic, Northwest area.

  • Polish exports from January to August 2020 at PLN 649.0 bn

    Polish exports from January to August 2020 at PLN 649.0 bn

    Foreign trade turnover in the January – August this year according to exports at current prices amounted to PLN 649.0 bn, while imports amounted to PLN 621.0 bn, Statistics Poland report.

    The positive balance reached the level of PLN 28.0 bn, while in the same period of 2019 year amounted to minus PLN 0.4 bn.

    In comparison to the corresponding period of the 2019,  both exports and imports decreased by 3.2% and 7.4% respectively.

    Poland has the largest share in total exports with developed countries – 86.1% (of which EU 73.4%), and imports – 64.9% (of which EU 55.1%), as against 87.2% (of which EU 74.3%) and 66.3% (of which EU 56.5%) in the corresponding period in 2019 year.

    However, the smallest share was observed with the countries of Central and Eastern Europe, which in total exports amounted to 6.1%, and in imports – 6.5%, as against 5.8% and 7.8% in January – August 2019.

  • Valentin Ionescu (ASF): There is still a high degree of uncertainty around the future evolution of economic activities

    Valentin Ionescu (ASF): There is still a high degree of uncertainty around the future evolution of economic activities

    Present today at the online debate: ”The Romanian insurance market” organized by Media XPRIMM, the Director of the Strategy and Financial Stability Department within ASF, Mr. Valentin Ionescu, made the following comments.

    ”According to IMF, the global economy is projected to contract sharply by 3% in 2020 reflecting a much deeper economic shock than during the financial crisis of 2009 when growth contracted only by 0.7%. In EU the forecast for Euroa area is – 8.7%, with Italy, Spain and France estimated to have a GDP decrease more than 10-11% .

    The National Commission for Strategy and Prognosis has revised downward the economic growth forecast from -1.9% (in the previous scenario) to -3.8% in 2020, due to the declining activity in industry (-8.6%), agriculture (-7.1%) and services (-2.7%) compared to 2019. According to the NCSP forecast, constructions will have a positive contribution to GDP this year, with an estimated growth of 5.8%. For the next year, NCSP estimates a recovery of the Romanian economy, with an advance of 4.9%.

    According to Summer 2020 Economic Forecast of the European Commission for Romania, real GDP is set to contract by 6% in 2020 and then rebound by 4% in 2021. Such estimates are made taking into account the assumption of a gradual lifting of containment measures, which has happened in recent months. Unfavorable evolution of the number of infections may lead to the reintroduction of stricter measures, and implicitly the rebound of the Romanian economy will take place at a slower pace.

    However, we expect a recovery of the Romanian economy in 2021, but there is still uncertainty about the full recovery of losses registered as a result of the crisis generated by COVID-19.

    Despite of the adverse environment , In the first 6 months of 2020, the insurance market in Romania had, overall, a positive dynamic without extreme fluctuations, amid a high degree of uncertainty. The volume of gross written premiums increased by approximately 3.4% for both life and non-life insurance, compared to the same period of the previous year. The gross written premiums for the non-life insurance business increased by 5.4% in the first half of 2020 compared to the first half of the previous year, while the value of the underwritings for the life insurance business registered a decrease of 4.2%.

    The concentration degree (by insurance classes, but also for insurance companies) remained at high levels (In MTPL Herfindahl Hirschman index is 0.2864, very concentrated). Also, the combined loss ratio remained high for the main insurance classes (A3 – CASCO and A10 – MTPL), but decreased compared to the same period last year.

    The most affected business lines, in terms of gross written premiums for non-life insurance, were the marine insurance which decreased by 45% and marine liability insurance which registered a decrease of 33%. Also, the aviation liability insurance decreased by 47% due to the massive disruption in the aerospace and aviation industry generated by the COVID-19 pandemic. The aviation industry has been severely affected by the introduction of travel restrictions and border closures, measures taken by states to prevent the spread of COVID-19.

    The increase in gross written premiums for both categories of insurances, non-life and life, in the first half of 2020 compared with the same period of the last year is due exclusively to the positive dynamic recorded in the first quarter of 2020. However, in the second quarter of 2020, the volume of the gross written premiums decreased by 1.8% compared to the second quarter of 2019, respectively by 9.3% compared to the previous quarter, due to the effects of COVID-19 and measures taken to prevent the spread of the virus.

    Compared to the first quarter of 2020, the non-life insurance market in Romania decreased by 5% in the second quarter of 2020. The decrease of gross written premiums between April – June 2020 compared to January – March 2020 was due to the decreases registered by the main insurance classes: class A10 (-6.8%), class A3 (-4.0%) and class A3 (-14.8%).

    The life insurance market decreased by 25% in the second quarter of 2020 compared to the previous quarter due to the decrease of the volume ​​of gross written premiums for all lines of business.

    At the end of June 2020, the asset allocations for Romanian insurers remained stable, with dominant exposures towards fixed income assets (mostly government and corporate bonds) and equities, exposing insurers to fluctuating market valuations due to the COVID-19 shock.

    A sharp drop in listed equities was registered at the end of the first semester of 2020 compared to the end of 2019 (by 20%). On the other hand, the unlisted equities has increased by 17% in H1 2020 compared to the end of 2019.

    The total assets held by the insurance sector in Romania have increased by 5% in the first semester of 2020 compared to the end of 2019.

    FSA (ASF)  issued the Norm no. 21/2020 which aims to extend the submission deadlines for both Solvency II reporting and national reporting, thus supporting insurance companies to continue their business activities in this context of high volatility and significant implications for economic activities.

    In March 2020, FSA also conducted a consultation on the impact of COVID-19 on the activity of insurance companies authorized and regulated by the Authority, addressing the following issues:

    • An analysis of the impact that this pandemic could have on the activity and financial stability of companies in terms of solvency, liquidity and potential change in the risk profile;
    • Presentation of the types of insurance and the risks they cover which could be affected by this phenomenon and a quantitative analysis of the impact of exposure to these types of insurance;

    26 insurance companies provided relevant information on the impact of coronavirus on their business. All insurance companies have submitted business continuity plans or procedures and/or measures for emergencies, including in pandemic scenarios.

    Most companies do not evaluate the impact of COVID-19 as a major one on their risk profile and financial position. Some of them performed additional stress tests and impact assessments, resulting a marginal impact. Also, most of the companies are well capitalized, with liquidity and solvency indicators above the minimum thresholds. From the perspective of insurance products, most companies have a low exposure to this type of risk.

    We are proactive in the emerging risks identification and, also, we are trying to  find solutions in order to mitigate all the risks.  Digitalisation is also our top agenda priorities. All the companies supervised by FSA have the posibility now to send the reports online.

    Although it still has a relatively small share in the total volume of gross written premiums, health insurance continued the positive trend observed in previous years, recording in the first 6 months of 2020 the highest half-yearly values.

    At the end of the first semester of 2020, the health insurance business line accumulated gross written premiums amounting to approximately Lei 264 million, an increase of approximately 29% compared to the same period of 2019. Most of the health insurance contracts in force (342,742 representing over 98% of the total number of contracts) are assimilated to non-life insurance.

    In the first half of 2020, the gross premiums written for suretyship insurance registered an increase of more than 90% compared to the same period of the previous year, while the value of gross claims paid  decreased by approximately 33% compared to the first semester of 2019.

    FOE increased with 11% till 500 mil lei GWP”

  • The Italian executive estimates an economic growth of 6% in 2021

    The Italian executive estimates an economic growth of 6% in 2021

    The Italian government published on Tuesday morning an update of the macroeconomic projections for 2020 and 2021 and estimates that next year the growth of the economy will be 6%, the deficit of 7% of the Gross Domestic Product and the debt of 155.6% of GDP, EFE reports.

    The Italian executive confirmed the estimates advanced last week for 2020: the economy will shrink by 9%, the deficit will stand at 10.8% of GDP and the debt at 158% of GDP.

    Authorities expect growth to be 3.8% in 2022 and 2.5% in 2023, while the budget deficit will be 4.7% of GDP in 2022 and 3% in 2023.

    Italy is committed to gradually reducing its debt to ”bring it back to pre-coronavirus levels” by the end of the decade. Currently, it is estimated at 154.3% of GDP in 2022 and 154.1% in 2023.

    Italy must send the draft budget and reform plan to the European Commission by mid-October.

    In the short term, measures are being considered to support employees and the productive sectors affected by the coronavirus pandemic, but will also include ”deep and high-impact investments and reforms”, such as ”a comprehensive fiscal reform that improves equity, efficiency and the transparency of the tax system”, to reduce the tax burden on families and to fight against evasion.

    There will be aid for families with children, support for digitalisation and infrastructure, all this ”at the same time as the constant reduction of public debt”.

  • European consumers prefer cashless payments

    European consumers prefer cashless payments

    Cash is losing ground in Europe, given that 36% of respondents to the Payments and Open Banking survey, conducted by PwC, say they use cash in 2020, 7 percentage points less than two years ago.

    However, consumers’ reorientation towards cashless payments is not reflected in an increase in their willingness to share personal data with third parties – a condition for the development of “open banking”.

    Thus, only 20% of respondents are willing to provide financial data.

    Banks remain at the top of trust

    According to the survey, European respondents say they trust more traditional banks and card providers for the exchange of personal information (17%).

    Compared to 2018, both banks and card providers lost 4 percentage points of confidence.

    Among other players, payment service providers are trusted by 9% of respondents and retailers by 8%, internet giants by 7%, while banks that operate exclusively online (neobanks) and FinTech would receive data only from to 3% of European consumers.

    Benefits for data exchange

    The most desired benefit for consumers to exchange personal data for services other than banking is the discounts on shopping, while the popularity of other benefits for using “free banking” products or for automatic filing of tax returns are more reduced.

    Cards use is increasing

    Instead of cash, consumers use cards, e-wallets or applications. The use of debit cards is increasing, in 2020, to 31% compared to 27% in 2018, and that of applications and e-wallets to 14% from 11%.

    The reasons why Europeans use cash over other payment methods are as follows: 34% say they use it if no other payment is accepted, 26% for convenience, 13% because they have security concerns, and 20% have more control of expenses / budget.

    The preference for cash varies greatly and has decreased at a different rate, for example in Switzerland it has fallen in the last two years from 60% to 45% and in Italy from 52% to 38%.

    COVID-19 a catalyst for non-cash payments

    The COVID-19 crisis has influenced the behavior of European consumers when shopping in stores. Thus, 44% use physical cards more often and 9% smartphones (for example Apple Pay).

    Respondents believe that these payment behaviors are long-lasting and only one in five expects to return to previous habits.

  • The Czech economy recorded a record decline in the second quarter

    The Czech economy recorded a record decline in the second quarter

    The Czech economy contracted by 10.9% in the second quarter of 2020, the most severe decline in the country’s history, according to revised data released by the Czech Statistical Office.

    Czechia’s GDP is expected to decline between 6% and 8% this year, followed by an advance of 3.9% next year.

    Amid the pandemic crisis, the deficit target has been set at 500 billion Czech crowns, or 8.8% of GDP, from the initial target of 40 billion Czech crowns, but the budget is on schedule for a deficit of 400 billion Czech crowns.

    Monthly income from employment decreased by 7.1%

    The average monthly income from employment reached CZK 34.142 in the Q2 and it decreased in real terms by 7.1%, compared to last quarter.

    In the year-on-year comparison it was 7.4% down.

    The significant decrease of income from employment reflected shutdown of production and closure of some (business) establishments/premises due to coronavirus pandemic.

  • The average annual household expenditure in Greece decreased by 30.3% since 2008

    The average annual household expenditure in Greece decreased by 30.3% since 2008

    The average yearly household expenditure in 2019 in Greece amounted to 17,738.64 euro (1,478.22 per month), recording an increase of 2.5%, in comparison to 2018.

    The average yearly expenditure per person in 2019, amounted to 6,942.84 €, recording an increase of 2.5% (168.84 €), in comparison to 2018.

    Half of households spent more than 1,151 euro per month and households living in a rented dwelling spent 17.7% of their total monthly consumption expenditure on rent.

    Food and non-alcoholic beverages accounts for the relatively larger share of expenditure (20.0%) followed by the categories housing (14.0%) and transport (13.4%), whereas education services represent the smallest share of expenditure (3.3%).

    20% of households with the lowest expenditure spent 54.9% of their budget on expenditure related to Food and Housing, whereas 20% of households with the highest expenditure spent 24.6% of their budget on this type of expenditure.

    The highest average yearly expenditure was recorded in the Region of Notio Aigaio and amounted to 20,093.04 euros and the lowest in the Region of Kentriki Ellada at 12,933.24 euros.

    The average annual household expenditure decreased by 30.3%, compared to the year 2008.

  • Austrian economy dropped by 12.1% in the second quarter of 2020

    Austrian economy dropped by 12.1% in the second quarter of 2020

    The Austrian gross domestic product (GDP) dropped by 12.1% in volume terms during the second quarter of 2020 compared to the first quarter of 2020 and by 14.3% compared to the second quarter of 2019, according to Statistics Austria.

    In 2019, the Austrian economy grew by 1.4%, which means a slowdown in growth dynamics compared to the previous years (2017: +2.4%; 2018: +2.6%).

    Private consumption declined by 12.6% in volume terms compared to the previous quarter (-16.1% compared to Q2/2019), mainly due to the lockdown of leisure services (accommodation, food service, arts and entertainment).

    Consumption of housing (rents, electricity) and food/beverages grew slightly.

    The COVID-19 measures also left their mark in the service sector, with accommodation and food services being most affected.

    They recorded a decline of 65.2% in volume terms compared to the first quarter of 2020 (-61.1% compared to Q2/2019). As expected, arts, entertainment and recreation also suffered losses (-27.0% in volume terms compared to Q1/2020; -35.3% compared to Q2/2019).

    In total, each economic activity recorded negative volume growth in the second quarter of 2020 compared to the first quarter in 2020.

    Real estate activities (-0.7% in volume terms compared to Q1/2020; +2.2% compared to Q2/2019), health and public administration (-0.5% in volume terms compared to Q1/2020; -0.6% compared to Q2/2019) as well as information and communication (-1.3% in volume terms compared to Q1/2020; +1.1% compared to Q2/2019) were hardly affected.

    Similar to the development of foreign trade, manufacturing already slowed down in 2019. The lockdown then led to another remarkable slump by 15.6% in terms of volume compared to the first quarter of 2020 (-18.4% compared to Q2/2019).

  • The pandemic has taken a heavy toll on European dealmaking activity

    The pandemic has taken a heavy toll on European dealmaking activity

    The COVID-19 pandemic has taken a heavy toll on European dealmaking activity. However, opportunities remain for those willing to take risks, according to the eighth edition of the European M&A Outlook, published by CMS in association with Mergermarket.

    According to Mergermarket data, in H1 2020, European deal volume fell 31% to 2,800 transactions and aggregate value dropped by 29% to EUR 262.9bn compared to the same period in 2019.

    Volume and value figures for Q2 are the lowest for any quarter since 2013.

    This period of volatility looks set to continue. 74% of respondents to this year’s survey say the pandemic has lessened their dealmaking appetite, with 65% not considering M&A at all, compared to just 45% last year.

    Correspondingly, only 2% of respondents expect their deal activity to increase this year, in comparison to 27% in 2019. More than half of those surveyed (53%) expect activity levels to decrease significantly during the next 12 months.

    Further key findings from the report

    Struggling companies are unlikely to find the help they need from the corporate sector. Only 14% of corporates said they would consider acquiring distressed targets at this time. Instead, 83% of such respondents identify the acquisition of new technologies as one of their two principal deal drivers.

    Non-distressed deals will be mostly found in the sectors which have proven most resilient through lockdown periods, including technology, media & telecoms (TMT), financial services, pharma, medical & biotech (PMB) and industrials.

    Respondents pointed to TMT (68%) and PMB (38%) as the two sectors where they expect to see the most European M&A activity over the next year. Meanwhile, the industries hit hardest by COVID-19 – including aviation, retail, leisure and restaurants – will find it difficult to find potential buyers without accepting much lower valuations.

    North America is considered the most attractive overseas market, with almost two-thirds (63%) of respondents predicting that it will be the top non-European target region for European acquirers in the coming year. Asia-Pacific placed a distant second at 35%.