Word: growth
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Dates: during 1980-1989
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Even a mild slowdown in Europe's growth rate would be bad news for the U.S. economy. Washington has been counting on increased exports to Europe to help curb America's huge trade deficit, which hit a record $169 billion in 1986. But there is no assurance that Western Europe can keep up its present consumption of American imports ($59 billion last year), much less develop a greater appetite...
Blocking the path to robust European growth is the low value of the dollar. Despite recent gains, the U.S. currency is still down more than 40% against the West German mark and the French franc since early 1985. That decline has damaged many of Europe's export-driven economies by making their products more expensive in relation to American-made goods...
Among the countries hit hardest is West Germany, whose GNP actually declined at a .5% annual rate in the first quarter of the year. Nonetheless, Herbert Giersch, an economist at the University of Kiel, predicted that more stimulative government policies would push the growth rate to 2% for 1987 as a whole. The outlook may be bleaker for France, which is heavily dependent on such exports as aircraft and telecommunications equipment. Said Economics Professor Jean-Marie Chevalier, of the University of Paris Nord, who predicted a 1.3% growth rate this year for his country: "There is now a mood...
...serious impediment to European expansion is the high level of interest rates. In Sweden, where GNP growth is expected to be only 1.5% this year, the interest rate charged by banks to prime corporate customers can be as high as 11.5%, compared with the 8.25% levied on similar loans in the U.S. Nils Lundgren, vice president of Pkbanken, a major Swedish bank, argued that the U.S. was responsible for pushing up interest rates around the globe because Washington must borrow so much money abroad to help finance the federal budget deficit ($221 billion last year). Said Lundgren...
...pace. British businessmen are enjoying a new rush of confidence now that Conservative Prime Minister Margaret Thatcher has won a third term. But Samuel Brittan, an economics columnist for London's Financial Times, noted that Britain faced a real challenge in trying to remain an "island of rapid growth without an improvement in its main trading partners." The same task confronts Italy, which is expected to expand at a 3% rate this year. Said Guido Carli, former Governor of the Bank of Italy: "I doubt that Italy can sustain a growth rate that is higher than the overall average...