Business
Euro zone rebounds from recession but clouds gather
FRANKFURT (Reuters) – Europe appears to have weathered a pandemic-induced recession better than many feared, a slew of indicators suggested on Tuesday, but prospects for a second wave of infections and a hard Brexit are once again raising talk of more stimulus.
Having shrunk by over a tenth last quarter, the euro zone economy is quickly regaining strength on the back of relatively resilient consumption, supported by job subsidy schemes, tax cuts and lavish stimulus from the European Central Bank.
Indeed, consumer confidence in the 19 countries sharing the euro rose to -13.9 this month from -14.7 in August, the European Commission said, a reading below its long-term trend but easily beating market expectations.
Adding to the positive news, the Ifo Institute upgraded its forecast for Germany, expecting GDP in the euro zone’s biggest economy to shrink 5.2% this year, a big improvement on its last projection for a 6.7% drop or the Bundesbank’s 7.1% forecast.
The figures suggest that unprecedented fiscal and monetary support have insulated the bloc from an unprecedented recession and households began to spend once again as most restrictions were lifted during the summer months.
Unemployment in the region has barely risen compared to some other major economies and, at 7.9%, has still not moved far from the more than 10-year low of 7.2% hit earlier this year.
Germany’s HDE retail association now expects nominal sales to grow by 1.5% this year, a sharp upward revision from its previous estimate for a 4% drop, helped by a surge in online sales and stimulus measures that have included a temporary VAT cut and cash handouts for parents.
Unsustainable?
But the good news may be unsustainable.
Investors are growing increasingly worried about surging coronavirus infections in countries like France and Spain, increasing the risk of lockdowns, a factor not captured by Tuesday’s indicators.
“We doubt this (confidence rise) will be sustained,” Melanie Debono at Capital Economic said in a note. “Further restrictions are being imposed and look set to cause consumer confidence, and perhaps household spending, to drop back in the fourth quarter.”
Worries over a hard Brexit merely compound the troubles and European stocks tumbled this week as markets are now pricing a more protracted recovery with more frequent interruptions.
Indeed, many euro zone countries have reintroduced travel restrictions, forcing airlines to scale back passenger services after a relatively quick run up over the summer.
But most governments appear keen to avoid the type of hard lockdowns seen in early spring and instead opt for localised, targeted measures that allow people to maintain ordinary activities as much as possible.
Mortality is also not following the surge in infections, supporting government efforts to limit disruptions.
Still, the outlook is sufficiently murky for the ECB to make the clearest case yet for even more stimulus, perhaps as soon as the fourth quarter.
“Faced with such a sizeable downward skew (in risks), there is a strong case for our reaction function to be asymmetric, as the risks of a policy overreaction are much smaller than the risks of policy being too slow or too shy to react and the worst-case scenarios materialising,” ECB board member Fabio Panetta said.
He added that while the ECB has done a lot, the inflation outlook is not yet satisfactory as price growth is “uncomfortably” below the ECB’s aim of close to 2%.
“If we encounter shocks that compress demand and pose additional threats to price stability, our reaction function is clearly spelled out: a policy response is necessary and forthcoming,” he said.
Reporting and photo: Reuters
Maldives on Thursday welcomed the one millionth tourist to visit this year.
The one millionth tourist is a Thai named Sutapa Amonwivat, who arrived from Singapore with her husband and two children. This is her second visit to Maldives.
Maldives Marketing and Public Relations Corporation (MMPRC) and the Ministry of Tourism gave a warm welcome to Sutapa at the Velana International Airport (VIA) Thursday afternoon. She was welcomed at the VIA by tourism minister Ibrahim Faisal, MMPRC Managing Director Ibrahim Shiury and senior officials of various relevant agencies.
After welcoming her with traditional offerings, she was presented with various gifts by the ministry, MMPRC, customs, immigration, Maldives Association of Travel Agents and Tour Operators (MATATO) and Trans Maldivian Airways (TMA).
Maldives reached one million tourists in June, three weeks earlier than last year. The number of tourists reached one million on July 16, 2023.
Maldives expects to reach 2 million tourists this year.
Chongqing Airlines on Monday began its inaugural flights to Maldives.
The Chongqing-Male route, scheduled three times a week, is expected to strengthen the bonds between China and the Maldives, opening up exciting new opportunities for tourism and cultural exchange.
The inaugural flight was welcomed upon its arrival at Velana International Airport (VIA) in Maldives, where local officials and tourism representatives expressed their enthusiasm for this new development.
“We warmly welcome our friends from China to our beautiful islands. This new connection strengthens our bonds and opens up new opportunities for tourism,” the tourism ministry said on X.
Maldives currently welcomes four airlines from China, including China Eastern, Beijing Capital Airlines, Xiamen Airlines.
In January, Maldives government urged tourism stakeholders in both Maldives and China to ramp up efforts to restore China’s position as the primary source market for Maldives tourism, a status held before the onset of Covid-19.
China, being the largest source market for Maldives tourism before the pandemic, saw a resumption of tourist arrivals from January 2023 after a three-year hiatus due to the pandemic. In 2023, the Maldives welcomed 187,118 Chinese tourists, marking a significant recovery in numbers. This year, the Maldives has welcomed the most number of tourists from China, with over 107,940 or 11.5 percent of total arrivals by June 12.
CROSSROADS Maldives has introduced WeChat Pay, widely known as Weixin Pay in China, across its world-class resorts, SAii Lagoon Maldives, Curio Collection by Hilton, and Hard Rock Hotel Maldives. This payment option is made available to enhance the convenience and overall experience for guests from China, making their stay in the Maldives more enjoyable and hassle-free.
Understanding the needs of the diverse guests, CROSSROADS Maldives has integrated WeChat Pay into operations, allowing guests from China to easily and securely conduct transactions using a payment method familiar to them. The introduction of WeChat Pay is a testament to CROSSROADS Maldives’ dedication to enhancing guest satisfaction by offering exceptional experiences at every turn. What is also expected through this initiative is that the guests could benefit from better foreign exchange rates, translating to better savings on their expenditures during their stay.
The option is available for guests in-house conveniently at both resorts as well as across the Marina at CROSSROADS Maldives where a wider variety of unparalleled dining and retail experiences are available for all guests. The day visitors from China will also therefore equally benefit from this new introduction at the Maldives’ premier multi-island integrated leisure destination.
SAii Lagoon Maldives, Curio Collection by Hilton, is a vibrant tropical escape that offers unique and locally inspired experiences. The resort features spacious rooms and villas, a variety of dining options, and an array of recreational activities designed to cater to the desires of modern travellers. Guests can escape to the island’s SAiisational natural beauty, enjoy water sports, and indulge in spa treatments, all while relishing the personalised service that defines Hilton’s Curio Collection.
Hard Rock Hotel Maldives brings the iconic Hard Rock spirit to the tranquil shores of the Maldives. This family-friendly resort offers a perfect blend of relaxation and entertainment, featuring music-inspired experiences, live performances, and the brand’s signature amenities. With luxurious accommodations, diverse dining options, and a plethora of activities for all ages, Hard Rock Hotel Maldives ensures an unforgettable holiday experience for every guest.
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