Top executives of consumer electronic companies, gathered at a trade fair, offer differing opinions about the sustainability a European economic upswing. "As far as looking at Europe we have seen good development," navigation device maker Navigon Chief Executive Egon Minar told Reuters in Berlin on the sidelines of IFA, Europe's largest consumer electronics trade fair.
The European market for IT products rose 4 percent in the first half of this year and the trend is likely to continue for the rest of 2010, market researcher GfK said on Friday. "For the remainder of the year maybe the growth is not as fast as the second quarter, but it would still be steady growth," Minar said. LG's home appliances unit chief Young-Ha Lee and Panasonic's head of Europe, Laurent Abadie, struck a slightly more optimistic tone.
"We expect to see slight recovery in Europe in the second half when compared with the first," said LG's Lee. Abadie said: "There a several trends towards recovery in Europe ... some very visible in Germany." Recent data for the eurozone has been stronger than expected but the European Central Bank still expects recovery to be moderate and uneven, President Jean-Claude Trichet said this week.
Germany - Europe's largest economy - grew at its fastest rate since reunification in the second quarter and more than twice as fast as the overall euro zone, where some of its partners face the risk of a double-dip recession. Dinesh Paliwal, the CEO of audio equipment maker Harman International Industries Inc, said he did not see signs of a double-dip recession gripping the world economy.
"There are some who say the probability of a double-dip recession is more than 50 percent but I don't subscribe to that," he said. "That Germany should contract? I don't see that; that China should contract? I don't see that," Paliwal said, adding that one cause of concern was uncertainty over new taxes and regulatory changes especially in the United States.
"Right now there are lots of companies sitting on the fence with billions of cash," he said, adding that clarity on what was to come would help businesses plan ahead.? Others were more pessimistic. "I am an optimist, but I am not optimistic that we'll get out of this negative development any time soon," Dutch navigation device maker TomTom's Chief Executive Harold Goddijn told Reuters at IFA.
Like its main competitor Garmin, TomTom has come under pressure after Google and Nokia began offering free navigation features on their GPS-equipped smartphones earlier this year. "I think it's going to be bumpy for the next year or two. It might take time before we get out of this," he said, adding that TomTom was internally predicting a sideways movement.
"Hopefully I am wrong," Goddijn said. The eurozone grew 1.0 percent in the second quarter, although the breakdown by country points to a lopsided recovery. Greece is still in recession while Portugal and Spain managed just a tenth of Germany's growth rate in the second quarter. Europe chief of Japan's Sharp, Hiroshi Sasaoka, recalled Japan's so-called lost decade when economic expansion came to a total halt during the 1990s. "Europe could be in that phase right now," Sasaoka said. "I hope this won't happen in Europe but there is some risk that it may."
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