Recession Fears Mount in Europe, But Consensus Forecasts Growth
BERLIN -- When the last recession hit Europe in 1993 in the aftermath of the Gulf War, corporate profits shrank by more than 20% from two years earlier.</br></br>Now, fears are mounting that the Sept. 11 terrorist attacks and the weakening U.S. economy may tip an already slowing Europe into another recession. Is a similar profit squeeze expected?</br></br>Hardly.</br></br>The latest earnings consensus forecasts 30% growth from the end of this year through 2003, according to Merrill Lynch. A compilation of estimates done nine days after the attacks expects European profits to grow by 14.6% next year. That actually is up slightly from the August consensus The compilation was done by IBES, a financial-research firm.</br></br>That comforting outlook could mean one of two things: European companies are reasonably well fortified against the worsening economic climate which likely won't turn into a recession and could signal a stock-market rally in the months ahead. Or, it could mean these companies and investors are in for a rude surprise.