Europe surpasses US, Japan in trade gains

Nov 27 | Updated: Nov 28 2006, 05:30am hrs
Europe, where worker anger over globalisation sparks street protests, is surpassing the US and Japan in the race to reap benefits from the explosion in world trade and investment. The continent is claiming a bigger share than the US of the increased trade with fast-emerging markets such as Brazil, Russia, India and China, say economists at Goldman Sachs Group Inc. Companies such as French retailer Carrefour SA and German software maker SAP AG are winning customers in emerging markets at the expense of rivals based in other regions.

It raises eyebrows when people hear it, but Europe is doing well from globalization and greater trade, says Erik Nielsen, chief European economist with Goldman Sachs in London.It stands to benefit much more in the future. Investors have already taken note, with global fund managers naming the dozen-nation euro area as their preferred stock market worldwide for six straight months and forecasting more gains next year, according to findings in a Merrill Lynch & Co. survey published this month.

Globalisation is a tough sell, though, for workers in Europe, with its history of state ownership, guaranteed employment and strong unions.

European companies are better able to exploit opportunities in emerging markets partly because they have cut jobs at home or moved factories to cheaper labour markets overseas to become more competitive.

While Europe is benefiting from globalisation, the continents workers perceive it as a threat to the job security and leisure time theyve enjoyed for decades, says Martin Baily, a senior adviser at McKinsey & Co. in Washington.

Bloomberg