CCTV Script 16/05/13
This is the script of CNBC's news report for China's CCTV on Thursday, 16 May.
Welcome to the CNBC Business Daily.
The Euro came under pressure today, after data showed that the Euro Zone's economy fell into its longest recession since the bloc was formed. For the first quarter, GDP shrank by -0.2%, missing Reuters estimates for a 0.1% contraction. Speaking to CNBC, Peter Bofinger from the German Council of Economic Experts said that region was still facing headwinds. Have a listen.
[Sound on tape by Peter Bofinger, German Council of Economic Experts: In my view, this shows that the worst of the euro crisis is not yet over. We're in the middle of the crisis and even more, it is spreading from the peripheral to the core. Policymakers should be very concerned about these developments.]
Germany, which generates almost a third of the bloc's economy, managed to narrowly skirt a recession. For the first three months of the year, growth came in a weaker than expected 0.1 percent. Other major economies though were not as lucky France contracted by 0.2 percent, its first downturn in four years. While Italy reported its seventh consecutive quarter of decline, the longest since records began in 1970.
Despite the grim outlook, the region's equity markets continue to put on gains. So should investors remain in European equities? Here's a view from one our analyst.
[Sound on tape by Kumar Palghat, Founder & Director, Kapstream: Fixed income the game is over it looks like, because yields got to levels where it's unsustainable, equities doesn't look like they're gonna come off anytime soon.]
What about the single currency? Here's Kumar again.
[Sound on tape by Kumar Palghat, Founder & Director, Kapstream: I think the Euro has to go down just like everything else has, I mean, in a global competitive devaluation, you've had the dollar going down for a long time, you've got the yen going down now, so at some point the Euro has to go down. It's hard on Europe to be competitive with the euro at these levels. I think at some point the US dollar goes up which is already starting to look like it and I think that will benefit Europe, so I think Euro goes down not up.]
But it might not be all gloom and doom. A Reuters poll of analysts expect growth to return to the euro zone in the second half of this year, although they don't expect a strong recovery until at least 2015. And our next guest is hopeful that the dark clouds will eventually fade away. Have a listen.
[Sound on tape by Christian Schulz, Senior economist, Berenberg Bank: The data that we've seen from the euro zonefor the first quarter growth, the euro zone is still in recession. I mean if you look at it, at least the recession is easing. That's something positive if that trend continues then by the third quarter maybe of this year we should be out of recession in the euro zone.]
Li Sixuan, from CNBC's Asia headquarters.