Market
Economic growth in the Euro Area was substantially lower in 2008 than in
2007. The growth amounted of 0.7% (2007: 2.6%). After three quarters of
negative quarter-on-quarter growth, the eurozone is in its first recession
since its creation in 1999. This is primarily due to lower investment and
private consumption (0.5%, compared with 1.6% in 2007), both as a result of the
credit crisis. Government spending did increase slightly. The labour market
deteriorated somewhat in comparison with last year, with lower employment
growth. Average unemployment in 2008 was unchanged from 2007, at a historically
low level of 7.5%. After an initial further fall in unemployment, this
nevertheless rose again somewhat in the course of the year. The deteriorating
economic situation led to a drop in consumer confidence during the year, and
the same applied for the confidence indicator in the retail trade. As a result,
spending growth was slower in the retail trade than in 2007. Within the EU15,
turnover increased by 1.2% (2007: 2.9%). In volume terms, there was even a
slight fall, of 0.3% (2007: +2.3%). The turnover growth was therefore actually
due entirely to price increases. Overall, the food sector outperformed the
non-food sector, which suffered more from the consequences of the credit
crisis. Inflation rose strongly in the first part of the year, primarily as a
result of rising food and oil prices. In the final quarter, it fell back again
fast, as the persisting credit crisis put pressure on oil prices. The average
inflation rate for the full year was 3.3% (2007: 2.1%). The credit crisis and
its consequences led some retailers to reduce or postpone their expansion plans.
This was not only due to disappointing sales figures, but primarily because
their business operations were hampered by the fact that the credit crisis has
made it more difficult to contract insurance and loans. The emerging
polarisation of prime (A) and secondary locations and good quality and less
good quality centres continued in 2008, with chains, in particular, abandoning
secondary locations and centres. The yield adjustment due to the credit crisis
was therefore sharper at secondary locations and centres than at A locations,
increasing the gap still further. For more information on the investment
market, see the section on the valuation of the portfolio.
Source: Annual Report 2008, Chapter Review of operations, page 39 (PDF, 2,1 MB)
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