EUROCHAMBRES Economic Survey 2016: slow European recovery continues despite fragile business confidence
EUROCHAMBRES, the European Chamber of Commerce, 23rd annual Economic Survey (EES2016) has shown that 2016 growth perspectives are improving, however stagnating domestic demand, uncertain external economic conditions and rising labour costs are cited as the main challenges for the year ahead. Irish Chambers of Commerce were among 56,000 businesses and Chambers of Commerce from 26 European countries to feed into this economic survey.
External factors and reforms
The results of EES2016 show that external factors (a weaker Chinese economy, the Russian economic crisis) are affecting some of Europe’s leading export countries. Structural reforms seem to be having a positive effect in several member states, but results show that considerable progress is still needed in Cyprus and Greece. The survey shows that despite geopolitical tensions and crises in Emerging Market Economies, the domestic demand, employment and export sales indicators forecasts suggest a strong positive reaction to lower oil prices and Euro depreciation.
• Domestic sales expectations for 2016 are positive, with Spanish, Portuguese and Romanian businesses the most optimistic. Part of this success is due to the reduction of oil prices that will boost the private consumption for the next year.
• Export sales are expected to increase in 2016 after a small drop in 2015. These fluctuations can in part be attributed to the effects of the euro depreciation and geopolitical concerns. The greatest improvement is recorded in Portugal and Latvia.
• Employment in 2016 registers a modest improvement, continuing the positive trend of 2015. Eastern European countries generally anticipate a positive year for job creation, while Italian expectations remain negative.
• Investment and business confidence do not follow the positive trend of other indicators. Feedback from the Chamber network links the drop in confidence with concerns among businesses about recent economic and political tensions outside the EU. Slovakia, Slovenia, Estonia and Hungary register a particularly significant fall in business confidence for 2016.
EUROCHAMBRES Secretary General Arnaldo Abruzzini reacted to the findings: “The overall results are encouraging and improvements in sales and employment indicate that the post-crisis reform agenda is having a positive effect. But EES2016 also highlights businesses’ ongoing caution, as well as exporters’ understandable sensitivity to currency fluctuations and geopolitical tensions.”
Ian Talbot, Chief Executive, Chambers Ireland commented: “The Irish and wider European recovery process will only gather real momentum when business confidence and in turn investment levels pick up. This underlines the importance of EU level initiatives to facilitate the movement of capital, to create an internal market that’s fit for the digital era and to secure ambitious international trade agreements”.