The euro, written off many times during a crisis-wracked year, seems to have survived, but next year could prove equally difficult if European economies continue to struggle.
The currency finished the year strongly after the 17 eurozone nations earlier this month agreed a deal to supply long-delayed bailout funds to Greece to keep the country afloat, and the bloc intact.
Athens in turn delivered on its part of the bargain — more stinging austerity, economic reforms and a tight budget — all with the aim of cutting its massive debt burden to a more sustainable 124 percent of GDP by 2020.
Progress toward tighter economic and fiscal coordination in the eurozone, and a key first step toward a shared bank supervision regime, rounded out the gains, leaving Europe in better shape than seemed likely at the beginning of the year.
“Many observers felt it was all over for Greece [and its] ... remaining in the eurozone. As the year-end approaches, we know that these Casandras were wrong,” EU Economics Commissioner Olli Rehn said.
For many months, all analysts could talk about was Greece’s likely exit from the eurozone and what it would mean for the bloc’s future.
Now, “the likelihood of a member state leaving the eurozone is gone,” said Janis Emmanouilidis of the European Policy Centre.
Reflecting the change, Standard and Poor’s raised Greece’s sovereign debt rating by a massive six notches because of what it termed the “strong determination of ... [eurozone] member states to preserve Greek membership.”
Greek Finance Minister Yannis Stournaras said the decision “was a very important one that created a climate of optimism. But we know that the road is still long and hard, the hour is not one for easing up.”
Analysts also highlighted agreement on the eurozone’s Single Supervisory Mechanism to regulate its banks, a first step in ring-fencing lenders who get into trouble and threaten financial disaster.
Perhaps the key breakthrough, giving purpose and backing to the other reforms, was a commitment by European Central Bank (ECB) President Mario Draghi over the summer months to do anything necessary to save the euro.
In September, Draghi said the ECB would buy the sovereign debt of any eurozone member state without limit, if that is what it took to keep the financial markets in check.
This pledge of “Outright Monetary Transactions” meant markets could no longer enjoy a one-way bet against a member state as the ECB could step in on its side.
The immediate result was a sharp easing in borrowing costs, especially for Spain and Italy which had been tipped to follow Greece, Ireland and Portugal in needing a bailout.
That change, backed up a 100 billion euros (US$131.75 billion) lifeline for its banks, allowed the Spanish government to hold the line.
By year-end, few were talking of Madrid as the next debt crisis casualty, with its banks also being stabilized at a much lower-than-expected cost of 40 billion euros.
Some analysts say it is important not to get too carried away.
The outlook for the next two years “looks less unsettled and will be concerned above all with implementing the new supervisory regime and winding up mechanism for the banks,” CM-CIC Securities analysts said in a note.
Above all, the uncertainties for the coming year are political, with elections due in Italy and then Germany, while the situation in Greece “is still on a knife-edge,” Emmanouilidis said.
The economic outlook is also clouded, with the eurozone in recession and expected to slow further while unemployment runs at a record 11.7 percent, rising to unprecedented levels of about 25 percent in Spain and Greece.
Against that background, German Chancellor Angela Merkel’s guarded words on the outlook seem appropriate.
“We have already achieved a lot but I think we still have a very difficult time ahead,” she said after the last EU leaders summit of the year earlier this month.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the