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STMicroelectronics CFO: Euro zone needs demand boost

Tuesday, 25 Feb 2014 | 3:00 AM ET
Europe needs to boost internal demand: STMicroelectronics CFO
Tuesday, 25 Feb 2014 | 2:40 AM ET
Carlo Ferro, CFO at ST Microelectronics, says the European economy is seeing a recovery but needs to boost internal demand.

The euro zone needs to boost internal demand and weaken its currency in order to compete with other major markets, the CFO of electronics and semiconductor manufacturer STMicroelectronics told CNBC on Tuesday.

The comments by Carlo Ferro come despite a pick-up in the pace of growth in currency bloc. The euro zone's economy grew faster than expected in the fourth quarter, expanding by 0.3 percent over the period compared with the previous quarter — above analyst forecasts of 0.2 percent.

Ferro, however, stressed that this was not good enough.

(Read more: Euro zone's surprise growth boosts recovery hopes)

"We expect Europe to take advantage of a clear turning from recession into recovery. We see a recovery in 2014, however this is about 1 percentage point of GDP (gross domestic product) growth - not yet enough," he told CNBC at the Mobile World Congress at Barcelona.

"Europe really needs to boost internal demand and possibly a weaker euro/dollar rate as well."

Data released last week revealed that the euro zone's private sector continued to expand in February, although a slower pace than the previous month and less than analysts expected, indicating that the region's recovery is not yet steady.

The flash estimate of the Markit euro zone composite purchasing managers' index fell to 52.7 this month, although this is close to a two-and-half-year high.

2013 was 'year of change' for STMicroelectronics: CFO
Carlo Ferro, CFO at STMicroelectronics, says 2013 was an important year for the company.

(Read more: Euro zone optimism wanes)

"China and the U.S. are much more important for our growth this year and this follows expectations of the global GPD trend. We see the IMF's (International Monetary Fund) expected global growth figure of 3.7 percent as being very much driven by U.S. recovery and China keeping over 7 percent year-on-year growth," said Ferro.

His comments come as CNBC asked 51 chief financial officers (CFO) from Europe and Asia, who make up the CNBC CFO Council, to give their insight on the state of the world economy and conditions for doing business.

Nearly half of the respondents ranked weakening consumer demand as the strongest concern for their business. "(The) consumer today is not the strongest ," Ferro said.

No other risk factor came close in the survey, with fears of a China slowdown ranked the second-biggest risk, with 16 percent of the vote.

"Emerging markets (EM) are for sure a matter of concern for the overall market environment. But for us really EM is about China – and China is solid," Ferro said.

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