In the recent years, the data on EU trade has clearly shown that it has not been spared by the global economic downturn.
Since 2015, however, the economic performance of the European Union has improved, and unemployment rates have decreased. The rare situation of constant consumer prices of +0.0 % in 2015, low energy and fuel prices, as well as a good economic environment proved to be an advantage for European consumers. The retail sector, however, was not able to benefit solely from the increase in private consumption: a drop in interest rates pushed people to spend their money, but mostly for services, travel and leisure activities, and less so for retail goods.
The overall positive development of the retail trade this year, is likely to continue in 2017, with the Baltics and some Eastern European states, such as Romania (forecast growth of +5.0%) and Hungary (+2,7%) increasing their turnover in retail. Despite negative forecasts, the big economic downturn didn´t hit Great Britain at the moment, yet the strong turnover growth in retail trade (measured in €) should be viewed as relative due to the appreciation of the pound. For 2017, the growth is expected to reach +1,2%. Furthermore, Spanish market (+2,2%) and Italian economy will accelerate their growth, after recovering since 2014. An increase in purchasing power is recorded in Italy, although the rise will constitute only modertae 0,4% in the coming future. Structural problems of the Italian economy reflected in the recent bank crisis and inner political controversies, accompanied by the record high public debt, continue to act as a brake on economic growth.
The Scandinavian countries, Finland (0.5%) and Norway (-1.3%), continue to record backlogs. While the situation in Finland is conditioned by structural problems, in Norway, it can be attributed to the depreciation of the Norwegian krone. The recent sharp decline in turnover in Switzerland (-1.5%) is attributable to the exchange rate fluctuations after the annulment of the exchangerate peg of the Swiss franc to euro, which resulted in increased shopping tourism from Switzerland to the neighbouring countries. Moreover, economic distortions in Ukraine (2017 forecast of -2.5%) and Russia (-2.1%), explained by the Russian annexation of Crimea, as well as by the negative exchange rate, have also had an adverse effect on the retail trade.
In Bulgaria, which has recently experienced a major upturn in the retail trade, the economic activity is likely to drop by 0.2 percentage points in 2017, presumably, due to the lack of Russian investors and tourists. In Poland, on the other hand, a soft upward trend is likely to hold, and the retail trade forecast growth amounts to 1,5%. Slight growth can also be expected in the Czech Republic and Slovakia. Policies of these countries have raised incomes, but whether this trend leads to an increase in private consumption, is yet unclear.
The predominantly positive developments across Europe are still facing huge political and economic insecurities, and it remains to be seen, how they will affect consumers in European countries. The rising threat of terrorism, persistent waves of refugees, instability of such important markets as the USA, Russia and China, will certainly influence the European economy, as well as the enthusiasm and consumption possibilities of European consumers.
In Bulgaria, which has experienced a major upturn in recent years, economic activity in 2017 is likely to drop by 0.2 points due to the lack of Russian investors and tourists. In Poland, on the other hand, there appears to be an upward trend and the economy can be predicted to grow to 1.5%. Increases can also be expected in the Czech Republic and Hungary. The policy of these countries has increased income, but whether this trend leads to more consumption by the population, remains to be seen. Nevertheless, positive developments across Europe are still facing huge political and economic insecurities and it remains to be seen, how these will affect consumers in Europe. The rising threat of terrorism, persistent waves of refugees and the weakening investment interest into European companies will certainly contribute to future developments.
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