News Article

Weak Euro Boosting Europe’s Export-Driven Economy

Industry- & Retail Organizations

FRANKFURT, Germany (12 May 2000)–All is not well with the euro. Despite recent slight gains on the strong US dollar, Europe’s common monetary note, set for introduction on 1 January 2002, has been sluggish, to say the least. The euro has lost nearly a quarter of its value since being launched 16 months ago. Yet […]

FRANKFURT, Germany (12 May 2000)–All is not well with the euro. Despite recent slight gains on the strong US dollar, Europe’s common monetary note, set for introduction on 1 January 2002, has been sluggish, to say the least. The euro has lost nearly a quarter of its value since being launched 16 months ago. Yet while politicians worry about the euro’s downward ways, many European businesses say that it is a boon for the region’s export-driven economy. An Associated Press report states that the value of German exports to countries not using the euro are up big. Exports to the US, for example, increased 40% in February, and those to the UK 26%. According to the president of the German Association of Wholesalers and Exporters, Michael Fuchs, the biggest worry is that industry is becoming overly reliant on windfall profits from overseas sales. Prices for German cars sold in the United States have dropped by as much as 25% over the past several months, he said, as a weak euro made it cheaper to make a car in Europe and sell it overseas.
US companies like Ford Motor Co., Motorola Inc. and IBM Corp. are also cashing in as their European factories churn out exports that are cheaper in countries using higher-priced currencies, such as the pound and yen. Exports from other European countries are up as well. As for the euro’s fate; the drop could eventually lead to inflation, because it makes imports more expensive and could spill over into higher consumer prices at the corner store. “For the time being, we’re reaping the benefits of a weak euro,” said Stefan Schneider, chief economist with Deutsche Bank in Frankfurt. “But there are costs down the road.” (JW)

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