Home' Trinidad and Tobago Guardian : January 14th 2016 Contents BG22 INTERNATIONAL
BUSINESS GUARDIAN www.guardian.co.tt JANUARY 14 • 2016
Moribund. Decrepit. Scle-
rotic. Popular words to
describe the economy
shared by the 19 coun-
tries of the euro zone
but perhaps no longer
Very slowly---and primarily because of mas-
sive stimulus from the European Central
Bank---the euro zone is showing signs of recov-
ery. It is a dawn that policymakers are strug-
gling to nurture into broad daylight.
It also may not be felt equally across the
board, viz Spain and Greece s unemployed
versus Germany s busy builders.
But putting aside for the moment that the
euro zone s nascent recovery is happening just
as China is wobbling and financial markets
are unhinged, the numbers look generally pos-
Economic growth was running at an annual
rate of 1.6 per cent in the third quarter. While
this may not seem robust, it is roughly twice
the average annual growth rate between 2003
and 2014 (itself dragged down by the sharp
contraction of 2009), and the equal highest
rate since 2010.
So, for the euro zone, reasonably good. ECB
forecasters and economists polled by Reuters
expect it to grow at a slightly faster pace this
year at around 1.7 per cent.
Other data---though sometimes mixed---also
points to a stronger-than-advertised economic
Unemployment has been falling fairly steadi-
ly. It was at 10.5 per cent in November, which
is high, but the lowest in more than four years
and well below the 12 per cent of 2013.
Consumer confidence is on the rise and
economic sentiment is at a more than four-
year high. Manufacturing, as measured by
purchasing managers indexes, rose firmly into
expansion in 2015, albeit still shy of its 2013
Finding positives in such data risks com-
parison with a polite visitor complimenting a
dreary industrial city on its surprisingly good
But given where the euro zone has been---
and the many prophets of its political and
economic doom---its relative improvement is
"The world s third largest economic bloc is
actually doing rather well," said Andrew Mil-
ligan, head of global strategy at Standard Life
Investments, which is favouring European
equities, bonds and property in its portfolios
as a result.
"A number of drivers are supportive," he
said, listing "monetary and fiscal policy, a
somewhat healthier banking system, better
real wages growth helped by lower energy
costs, and pent up demand as consumer con-
fidence improves in those countries that have
had a hard few years."
The danger is that it could all be knocked
down in a second by what the finance minister
of non-euro zone Britain, George Osborne,
has dubbed a "dangerous cocktail" of threats
to the world economy.
Chief of these is the economic slowdown
in China, which is the broader European
Union s second-biggest trading partner behind
the United States. China and the EU trade
around 1 billion euros between them a day,
according to the European Commission.
UBS calculates that a one percentage point
slowdown in Chinese growth would slice 0.1
to 0.3 percentage points off EU growth, which
it says "should be manageable".
A similar slowdown in emerging markets
would lop 0.2 to 0.4 percentage points off
A case can be made, however, that in
Europe---and the euro zone in particular---the
economy has been growing even while China
and emerging markets have slowed.
In the first half of 2015, for example, big
gun Germany s export growth to China fell to
just 0.8 per cent and engineering exports
shrank by 4.9 per cent. Yet German gross
domestic product (GDP) growth was running
at 1.8 per cent at last count even with the
The overriding issue, though, is that the
ECB s 60 billion euro (US$66 billion) a month
stimulus package is in no danger of ending
and can offset much of the impact of trouble
Lower commodity prices will help too, what-
ever the concerns about deflation.
Of course, were the United States and the
world economy as a whole to have a serious
wobble, the euro zone would too.
But for now, the negative adjectives about
the euro zone may be overdone.
($1 = 0.9150 euros) Reuters
Most banks wouldn t lend to Roberta. She arrived in New
York from Mexico with papers but no credit history. Nonetheless,
Neighbourhood Trust Federal Credit Union, which specialises
in lending to immigrants, gave her advice and a US$2,000
loan. She started out selling Mexican food from a cart. She
now runs a food truck, employs five people and has plans to
Many immigrants, like Roberta, want to save or start a busi-
ness, but they struggle to get financing. In America, 23 per
cent of households headed by a noncitizen, and 35 per cent
of households where only Spanish is spoken, have no bank
accounts compared with eight per cent for the population as
a whole. There are multiple barriers: not only low incomes,
which make it hard to meet minimum-balance requirements,
but also trouble with language, identification and trust.
Neighbourhood Trust is trying to change that. More than
half its members are Latino, largely from the Dominican Repub-
lic, and many are undocumented.
Most of the staff are themselves immigrants and know their
members well: They visit borrowers businesses often and
offer workshops on financial literacy. The hands-on approach
keeps default rates low.
Other financial firms, in both America and Europe, are also
finding new ways to serve immigrants. Some are like Neigh-
bourhood Trust, small and community-minded. Others are
startups hoping for big profits. Oportun is a good example.
The American lender has made loans of US$1.9 billion since
2006, mostly to Latinos, using big data and clever algorithms
to lend to those without a credit history.
These companies have several tactics in common. The first
is to make it easy to open an account, a process that often
is unnecessarily slow and intimidating. Monese, a startup
based in London, allows European migrants to open an account
by phone with only a photo of a passport and a selfie.
A second shared tactic is to make life easier for those, such
as illegal immigrants, who may struggle to prove their identity.
Banks can be fussy: In one survey half of unbanked Mexican
immigrants in New York said that a lack of documentation
prevented them opening an account. However, many American
banks will accept taxpayer identification numbers and consular
ID cards, which can be obtained irrespective of immigration
status. In New York 12 financial firms, including Neighbourhood
Trust, accept a new card launched by the city government to
help undocumented migrants access services---though no big
Third, instead of waiting for immigrants to come knocking,
these firms seek them out. Oportun, for instance, has branches
inside shops in Latino neighborhoods. Mission Asset Fund,
a Californian nonprofit group, assists informal savings groups
in immigrant communities. As members make small, regular
payments into a common pot from which they take turns to
borrow, they also are able to develop a formal credit histo-
ry.A final tactic is to tailor services to meet the particular
needs of migrants. Extrabanca, in Italy, explicitly markets itself
as a bank for immigrants. Many of its customers are from
China, the Philippines and eastern Europe. It helps them deal
with the red tape involved in renting a house or starting a
Many American credit unions offer "citizenship loans" to
cover the costs of naturalisation. Some offer illegal immigrants
loans to pay the fees for amnesty programmes.
Larger banks can be put off, at least in part, by regulation.
Many have stopped offering international transfers in response
to tighter rules on money-laundering and terrorist financing.
In Britain new laws bar banks from opening accounts for illegal
Some big banks are catching on, however. Scotiabank, in
Canada, allows Chinese migrants to start opening an account
before leaving home, through a partnership with three banks
in China. Deutsche Bank woos Turkish customers in Germany
with a service called Bankamiz ("Our Bank"), which offers
bilingual tellers, free withdrawals at ATMs in Turkey and five
free transfers to Turkey each year.
Catering to immigrants can be profitable in the long run,
said Sherief Meleis of Novantas, a consultancy. Banks can win
customers who will be loyal for years to come.
As Rafael Monge-Portaro, the CEO of Neighbourhood Trust,
said of Roberta: "We trust her and she trusts us."
@2016 The Economist Newspaper Ltd. Distributed by
the New York Times Syndicate
Banking for immigrants: Far-sighted
Ever so slowly...
the eurozone economy awakes
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