EUROPE
BY SEAN MILMO
EUROPEAN CORRESPONDENT
MILMOCW@RODPUB.COM
Sales growth expected to slow in 2008
Paint
companies
anticipate a
decrease in
sales growth
for 2008
due to the
slowdown
in the global
economy.
European coatings companies and
raw material suppliers reported
good sales and profits figures in
their annual results for last year. But they
are admitting that in what they figure will
be a challenging year are unlikely to repeat
the same performance in 2008.
Nonetheless few companies in the European
coatings sector are pessimistic about this year,
despite the slowdown in the global economy
triggered by the financial crisis in the U.S.
whose effects have spread to Europe.
The optimism stems from the belief that
the Western European economy will perform
relatively well and should avoid the sort of
recession threatening the US. In addition
companies expect to benefit considerably from
continued robust growth in the economies of
Eastern Europe, particularly Russia, while
for those with global activities sales will be
bolstered by strong demand in Asia.
Economists are expecting GDP growth in
the 15-state eurozone at the core of the
Western European economy to slow to 1.5-
2.0% this year. This would still be in line
with the long term trend rate in the area.
In its latest economic assessment, the
Paris-based Organisation for Economic Cooperation and Development (OECD), representing the world’s leading industrialized
countries, estimated that quarter-on-quar-ter growth in the first half of this year in the
eurozone would only be slightly lower than
the second half of 2007.
One reason for the comparative vibrancy of
Western Europe’s economy has been the
strength of its exports, despite the steep rise of
the euro and other European currencies against
the U.S. dollar. The exports increase has helped
underpin demand for industrial coatings.
“Eurozone exports so far seem to be holding
up well in the face of euro appreciation,” said
Juergen Elmeskov, the OECD’s acting head of
economics. In January eurozone exports
increased by more than seven percent, their
fastest monthly growth rate since May 2000.
A lot of the foreign demand for Western
European exports has been coming from the
buoyant economies of Eastern Europe. The
Polish government is expecting first quarter
GDP growth of six percent in the first quarter
of 2008, a similar level to the total increase in
Poland’s output last year. Industrial production in Russia dropped to approximately five
percent in January due to the winter but is
expected to climb back to the eight to ten percent growth levels of last summer.
A large proportion of the leading
European coatings companies reported sales
increases of five to 10% or more in 2007,
helped to some extent by the vitality of
Eastern Europe and Asia, particularly
China. Rises in profits were in many cases
even higher.
