Southern Europe fears eurozone downturn

July 15, 2013 at 4:26 PM
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MADRID, July 15 (UPI) -- Eurozone troubles are not yet over and a new downturn could target southern European economies struggling to fire up growth and productivity, the latest cumulative EU data indicates.

Despite Portugal's reported small shoots of recovery, the entire swath of southern Europe, including Italy and Spain, is seeing jobs disappear amid a construction downturn.

Overblown real estate prices were one of the chief reasons for the banking crisis in Spain, requiring an EU bailout and severe austerity cuts, but cautious moves toward real estate regeneration have yet to show results.

Italian construction industry leaders said the sector is facing its worst crisis since World War II.

About 690,000 people lost their jobs as the construction industry contracted in Italy, the BBC said, citing Italian data. At least 11,000 companies collapsed in Italy amid a deepening downturn in the sector.

Construction industry failures in Spain are said to be much more widespread but latest data are scarce, partly because state data collection is paralyzed by the downturn.

Both Spain and Portugal are also facing political crises, some linked to corruption and mismanagement allegations, others rooted in the inability of parties to reach consensus on key issues. Reports in the Spanish press that Portugal may be negotiating another EU bailout were denied by European Commission officials.

The El Pais newspaper in Madrid said talks were under way to facilitate Portugal's smooth transition from the current bailout program. Portugal's more immediate problem, however, is healing a political rift that threatens to disrupt the austerity program and a successful conclusion of the bailout terms by next June.

Portuguese President Anibal Cavaco Silva is under fire for complicating politicians' efforts to forge a working relationship and move forward with the austerity package. The president's intervention threw markets into turmoil, feeding speculation a resulting stalemate could force Portugal back to Brussels for more help.

Spanish politics also threaten to derail the country's economic recovery amid allegations implicating Prime Minister Mariano Rajoy in a bribery scandal. Rajoy denies the allegations.

Rajoy's political troubles compounded Spain's economic woes amid warnings the country's steady brain drain toward Latin America would hit the infrastructure and delay recovery.

A survey by the Accenture suggests it's not all doom and gloom. A report by the consulting firm said new research shows the eurozone crisis is drawing global companies to Europe in search of acquisitions and new investment.

Two-thirds of respondents in an Accenture poll and accompanying report said the eurozone crisis could be an opportunity for organic and inorganic growth.

Fifty-six percent of 450 global executes surveyed said they have accelerated their investments in Europe as a result of the crisis. The report was published in late 2012 and updated for this year.

Analysts said the results of renewed investment from outside the EU could take some time to take effect.

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