Germany weighs heavily on the EU
A SLOWDOWN in Germany weighed on the euro zone in the first quarter, but the bloc’s economy still grew at its fastest in almost two years as cheap food and fuel boosted spending and a central bank stimulus programme kicked in.
Gross domestic product (GDP) in the 19 countries sharing the euro rose 0.4 percent quarter on quarter for a 1 percent year-on-year increase – just below forecasts in a poll of economists.
EU statistics office Eurostat gave no detailed breakdown with yesterday’s data, while economists said growth was likely to have been helped by lower food and energy prices, a weak euro and the asset-buying programme the European Central Bank had started in March.
“It is evident that improved growth was due to strengthened domestic demand,” Howard Archer, an economist at IHS Global Insight, said. “Domestic demand was certainly behind the improved growth in France and Italy, and it also reportedly held up reasonably well in Germany.”
Overall, however, growth in Europe’s largest, and traditionally export-led economy Germany slowed more than expected as imports rose more sharply than sales abroad.
That net drag from trade activity was replicated across the bloc as muted global growth curbed export growth despite a weaker euro, he said.
Germany’s GDP grew 0.3 percent on the quarter, down from 0.7 percent in the previous three months and undershooting a consensus forecast of 0.5 percent in a poll.
“Weak global trade is hitting German industry… and if the consumers start refraining from spending too, overall economic growth will decline rapidly,” Thomas Gitzel, the chief economist at VP Bank, said.
The growth rate was half that of neighbouring France, the bloc’s second-largest economy, which expanded by 0.6 percent, its strongest rate in two years, boosted by a 0.8 percent rise in consumer spending. Shoppers browse discounted boots on display outside a footwear store in Bonn, Germany. The German economy grew 0.3 percent in the first quarter, down from 0.7 percent in the previous quarter.
Finance Minister Michel Sapin said the French economy would now grow faster than the 1 percent the government had forecast for this year.
Archer said it was likely that consumer spending was a significant growth driver across the region and that investment had strengthened in a number of countries, helped by improved business confidence.
Quarterly growth in the euro zone was the strongest since the second quarter of 2013 and marked a steady acceleration over the growth rates of 2014.
Marco Valli, the chief EU economist at UniCredit, said the same pace of growth should be maintained in the current quarter as waning support from oil prices should be compensated by a stronger impact from the weak euro.
Economists said the faster EU growth and an end to a run of negative inflation numbers last month were unlikely to stop the central bank’s money printing programme.
The central bank has repeatedly said it has no plans to end the quantitative easing scheme before its scheduled conclusion in September 2016. – Reuters WAL-MART Storeswould start disclosing directly to investors what it spent on lobbying on a state-by-state basis, it said, responding to shareholder pressure to improve transparency on how it sought to influence public policy.
The previously unreported move would make Wal-Mart the first constituent of the Dow Jones industrial average to break out state expenditures at that level of detail, drawing attention to spending that in some states reaches hundreds of thousands of dollars.
Wal-Mart’s move could chart a course for others, just as rival retailers followed suit when it raised worker pay earlier this year.
While federal guidelines are uniform and fairly detailed, disclosure at the state level varies widely and information can be difficult to find, undermining attempts at oversight by outside groups.
At the same time, gridlock in Congress had shifted the focus of some corporate lobbying to the states, raising the importance of transparency, disclosure advocates said.
Wal-Mart’s decision to make state lobbying information more accessible was “exceedingly important” because spending at the state level could rival or exceed federal lobbying expenditures and, also, because of the company’s size and influence across the corporate sector, said Timothy Smith, the director of socially responsible investing at Walden Asset Management.
Since the first shareholder proposals targeting lobbying first appeared in 2011, there have been 143 resolutions on the ballots at 80 companies, and support has risen to an average of 29.2 percent of votes this year, according to proxy adviser Institutional Shareholder Services.
Wal-Mart’s move falls short of what Zevin Asset Management sought when it submitted a shareholder resolution for wider disclosure at Wal-Mart, including any “indirect lobbying” through organisations like the US Chamber of Commerce.
Wal-Mart would not change its disclosure policies on trade associations, spokesman Randy Hargrove said. – Reuters DIAL-UP internet pioneer AOL is worth less than a quarter of WhatsApp, a six-year-old mobile messaging service that gained popularity through word-of-mouth. In essence, the valuations reflect 15 years of the evolving messaging technology that saw AOL, one of the most recognisable consumer-technology brands of the 1990s, become stuck in the past in the minds of tech users. In the euphoria of 2000, AOL merged with Time Warner, but the deal turned into one of the biggest flops in takeover history, and now, six years after being spun off of Time Warner, AOL is being bought by Verizon for $4.4 billion (R53.2bn). And Verizon is not buying AOL as a consumer brand, but rather for its advertising technology. – Bloomberg
TENCENT
TENCENT Holdings’ profit rose to a record and beat analyst estimates as Asia’s second-largest internet company boosted sales by adding more smartphone games. Net income climbed 7 percent to 6.88 billion yuan (R13.6bn) in the three months to March, the Shenzhen-based company said yesterday. That compares with the 6.7 billionyuan average of eight analyst estimates. Tencent is benefiting from chairman Ma Huateng’s record $5.8bn (R70.1bn) deal spree last year as he boosted investments in mobile games, online shopping and travel services to compete with Alibaba Group. Ma is on track to invest even more this year, already agreeing to spend $3.3bn on acquisitions. – Bloomberg