After feeling the effects of the financial crisis, the European economy is out of a negative growth pattern, boasting 0.4% growth in the third quarter. Matthew Saltmarsh for The New York Times reports that other factors that signal a turnaround include a stronger currency and growth in countries such as Germany and France. (Why it takes more than a stronger currency for growth to resume).

Recovery in the region as a whole is mixed, though. Unemployment remains startlingly high in some areas, wages have stagnated and lending still needs a push to operate at full strength, Terence Roth and Christopher Emsden for The Wall Street Journal report. Greece, Finland and Spain are still contracting.

Although these economies continue to struggle along, industrial countries centered in the region’s economic core are setting the pace for an overall recovery. (Sweden has been a recovery leader). To play the recovery with ETFs, look for those areas that are sitting above their long-term trend lines (the 200-day moving average). Europe can be accessed via either broad, regional ETFs or some strong single-country funds.

For more stories about Europe, visit our Europe category.

• iShares MSCI Germany Index (NYSEArca:EWG): up 19.2% year-to-date

• iShares MSCI EMU Index (NYSEArca:EZU): up 28% year-to-date

• SPDR Dow Jones Euro STOXX 50 (NYSEArca:FEZ): up 25.8% year-to-date

• iShares MSCI Sweden Index (NYSEArca:EWD): up 62.3% year-to-date, one of the best

• iShares MSCI Austria Index (NYSEArca: EWO): up 67.9% year-to-date

Austria’s Central Bank chief estimates that the economy will contract by a less-than-expected 3.5% to 3.8% in 2009, reports Eva Komarek for Forbes. The country is struggling with a rising budget deficit and climbing unemployment rate, and a quick recovery doesn’t appear to be in the offing.

During the second quarter, exports dropped by 2.3%, as stated in Forbes. Austria’s economy is closely tied to that of Germany and more recently on the boost in exports to emerging European countries.

But there are a few points in favor of Austria’s economy:

• Resilient consumer demand could improve 2010 growth estimates
• Growth in the second quarter slowed another 0.5%, but it’s shrinking at a slower rate
• Austria’s largest bank has stated that its economic indicator, a gauge for six-month growth, increased to -0.9 from -1.8, the best result since the start of the indicator about 20 years ago, according to Forbes
• The prime factor for the improvement was the result of tax cuts and decline in consumer prices.

Still, there is a risk stemming from a rise in commodity prices, lagging impact on corporate balance sheets and unemployment rates.

• iShares MSCI Austria Investable Mkt Idx (NYSEArca: EWO): up 69.9% year-to-date

For more information on Austria, visit our Austria category.

Max Chen contributed to this article.

What’s got Austria in such a funk?

• Austria’s Central Bank estimates the country’s GDP will drop 3.8% in the second quarter and 4.1% in the third quarter, compared to the same periods last year, report Sylvia Westall and Mark Heinrich for Forbes.

• The Central Bank expected an overall 4.2% GDP contraction this year followed by another 0.4% in 2010 because of  poor exports and investments. Germany, which usually takes in around a third of Austria’s exports, has not been faring too well.

• The Austrian Higher Study and Economic Research Institute recently noted that the unemployment rate in Austria could reach a record 8.8% in 2010 as the country’s economy remains relatively weak, China View states. Unemployment is currently  around 7.7%, up from 5.8% in 2008.
  

• The institute goes so far as to claim Austria is in such a rut that it will take until 2013 for a recovery. The director of the institute thinks the economy will hover around a 0.5% to 1% gain in 2010. The institute forecasts a low inflation rate of 1.4% by 2013.

• iShares MSCI Austria Investable Mkt Idx (EWO): up 43.5% year-to-date

For more information on Austria, visit our Austria category.

Max Chen contributed to this article.

Driven by declining exports and investments, Austria’s GDP diminished 2.6% in the first quarter, as stated in Forbes. But the WIFO conducted a survey in which Austrian companies are showing some signs of stabilization, and further declines in the coming quarters are expected to be less dramatic.

On Monday, Bank Austria announced that its economic indicator rose to -2.5 in May, up from -2.9 in April, according to Reuters. This is the first rise in the country’s economic indicator since March 2007, marking a possible trough in the recession.

The Austrian Central Bank projects the economy will contract 3.5% for 2009, and decline 0.3% in 2010. Austria’s economy could take up till 2013 to reach pre-crisis levels.

Consumer confidence is on the rise as tax reforms start to help the economy. Business confidence is being boosted by favorable price trends and slower decline in orders.

Austria’s finance ministry said its $139 billion stimulus package was sufficient, denying a newspaper’s report that it wasn’t, the Guardian reports. A spokesman, however, said the ministry did expect some banks to ask for $20 billion in cash injections.

Risk in Austrian banks is widely spread and most banks are retail banks with high levels of primary funding from customers. This means they finance loans from deposits and not on the basis of interbank financing.

• iShares MSCI Austria (EWO): up 21.7% year to date.

For more information on Austria, visit our Austria category.

Max Chen contributed to this article.

The Austrian Institute of Economic Research states the following reasons why Austria’s economy could be on the up-and-up:

• Real GDP growth in Austria was 1.8% in 2008, far higher than the 1.0% average seen in the eurozone
• GDP for 2009 is expected to decline by 2.2% in 2009, a smaller contraction than other eurozone nations, such as Germany.
• Private consumption will be able to assume responsibility for cyclical stabilization because of impressive increases in real income of Austrians, reports Aba of Huliq News
• The strong foothold established by Austria’s economy in the Central Eastern Europe (CEE) markets serves as a stabilizing factor
• Risk in Austrian banks is widely spread and most banks are retail banks with high levels of primary funding from customers;  This means they finance loans from deposits and not on the basis of interbank financing

These are all attractive characteristics, however, one must still keep in mind that Austria is not immune to the global recession.  The nation’s GDP is expected to decline by 2.2% in 2009.  Additionally, one must watch the nation’s neighboring economies, because of their strong influences on Austria.

If you do want to grab exposure to Austria, take a look at the iShares MSCI Austria (EWO), up 13.8% year to date.

Kevin Grewal contributed to this article.

Global markets captured four of the top five positions for the month of March. Does this mean a turnaround is in the works? The only way to answer that question is to watch the trend lines to see what develops. Many markets are not out of the woods yet, and there are still fragile areas of the world.

The top ETF was the iShares MSCI South Korea (EWY), which gained 30.6%. After some renewed confidence in the financial sectors, South Korea plans to issue bonds overseas in an attempt to raise dollars and boost its own economy. The government is going to sell dollar-denominated foreign exchange stabilization bonds, worth an estimated $1 billion, in hopes of bringing in dollars and to increase the won’s value.

The second-place ETF was the Claymore/MAC Global Solar Energy (TAN), which gained 29.2%. The Chinese government “intends to take a firm attitude to support the local development of solar energy in China.” China didn’t offer specific details or a timeline. Banks are quickly lending money to China’s domestic solar companies, though, sparking concern that this could lead to dependency.

The third-best ETF was iShares MSCI South Africa (EZA), which gained 21.4%. The unemployment rate in South Africa declined and the Labor Force Survey reports a drop to 21.9% in the fourth quarter from 23.2% in the third quarter of 2008. In an effort to prop up struggling businesses, the South African government will help companies caught in “cyclical difficulties,” but the assistance will only be provided if companies are unable to get funds through banks.

The fourth-best ETF is Market Vectors Russia (RSX), which gained 21.3%. The Russian Economy Ministry expects lower GDP figures for the second and third quarters but there may be growth in the fourth quarter. Inflation has abated some in March. For 2009, the GDP is likely to fall 2.2%, investments may diminish 13.8%, but trade could grow 0.3%.

The fifth-best performing ETF is iShares MSCI Austria (EWO), which gained 20.8% for the month. In the fourth quarter of 2008, Austria’s GDP dropped 0.2% as a result of a 0.8% quarterly decrease in exports to Germany and emerging Europe. Forecasts have Austria’s economy contracting 0.5% for 2009, whereas it saw a 1.8% growth last year. Austria has lent heavily into central eastern Europe (CEE) countries with foreign lending amounting to $278 billion, or 65% of its GDP.

In the fourth quarter of 2008, Austria’s GDP dropped 0.2% as a result of a 0.8% quarterly decrease in exports to Germany and emerging Europe, reports Boris Groendahl for Forbes. Forecasts have Austria’s economy contracting 0.5% for 2009, whereas it saw a 1.8% growth last year.

Austria has lent heavily into central eastern Europe (CEE) countries with foreign lending amounting to $278 billion, or 65% of its GDP, writes The Prudent Investor for Seeking Alpha. This has caused financial markets to re-price risk for Austrian government debt over the past couple weeks. The CEE region accounts for around 50% of total Austrian foreign bank assets.

CEE economies are currently grappling with bleak economic conditions and this may result in higher loan defaults for Austrian banks.

The public debt ratio has climbed to 62.6% of GDP in 2008 from 61.9% in 2007, and is likely to hit just below 70% of GDP by 2010. Forecasts for Austria’s fiscal defict are at 4% to 5% for the next couple of years because of rising expenditures and declining tax revenues.

An Austria aid package has be rejected by the EU, which included expanding fiscal stimulus policies and aid for Eastern European countries. The machinery industry and automotive suppliers in Austria are seeing the effects of an ailing German economy, their main buyers.

• iShares MSCI Austria Investable Mkt Idx (EWO): down 4.9% year-to-date; up 26.5% in the last month

Max Chen contributed to this article.

1. Use them for diversification. You don’t have to choose one stock. Google (GOOG) or Yahoo (YHOO)? Instead of choosing one or the other, you can get exposure to both and spread the risk. Technology Select Sector SPDR (XLK) holds both Google 4.6% and Yahoo 1.2%.

2. International exposure made easy. If overseas exposure is what you are after, then you can go two ways; A broad-based international funds such as Vanguard All-World ETF (VEU) gives exposure to various countries such as Canada, United Kingdom and Australia in one fund. Or a single-country fund can give the right amount of exposure for a specific need within a portfolio. iShares MSCI Austria (EWO) gives exposure to Austria and also gives a portfolio the exposure to Eastern Europe.

3. Target Specific Sectors. ETFs are great for well-rounded exposure to a certain sector. Bonds ETFs, for example, can also be used to get diversified access to an area that was once cost-prohibitive for most investors. Utilities Select Sector SPDR (XLU), iShares Dow Jones Transportation Average (IYT),  iShares Dow Jones U.S. Telecom (IYZ), CurrencyShares Japanese Yen (FXY), and iShares S&P GSCI Commodity Indexed Trust (GSG) are all examples of ETFs that give investors simple, targeted access to a specific sector.

4. Easy Flexibility. ETFs are liquid and trade throughout the day like a single stock. You can get in and out of the fund on your terms, and get pricing at all times of the trading day. It is a good idea to have a strategy when investing with anything, and for ETFs, we suggest watching the 200 day-moving-average. If a fund dips below this, or goes 8% off its high, it’s time to exit. ETFs make this easy because of their flexibility.

5. Shorting and leverage ETFs have made some of the most difficult tasks linked to investing easier. Shorting the market and leveraging your exposure is now possible through one fund. It is not foolproof, however, and the risks of shorting the market still apply. Investors need to understand them and be sure they can handle it.

6. What you see is what you invest in. You know what you’re getting when you invest in an ETF. They follow an index, so there’s no guessing. Since there is not a manager, the fees are much lower. You can also go to any provider’s site to see current holdings. Visit our provider page for easy access to the websites for all ETF providers.

7. Do your research. Although ETFs are transparent, the fact remains that a bit of your own research can go a long way. The great news here is that doing this research is easy, since everything you need to know is out in the open and readily accessible. It is recommended to research the holdings of what the ETF actually holds, as well as what the allocation is to that specific holding. Our ETF Analyzer makes this a cinch and you can do it all at one stop.

The Austrian economy is set to contract up to 0.5%-1.0% in 2009, which will not be a catastrophe, according to a member of the European Central Bank Governing Council.

Member Ewald Nowotny says that it’s more of a “quasi-crisis,” even though this type of shrinkage has never been seen in Austria, according to Sylvia Westall for Reuters.

The contraction means to expect job market shrinkage, decreased investment activity, and difficulty for some companies. Austrian research institute WIFO said in December it expects growth to slow by 0.1%-0.5%  in 2009 and the government has put in place a $135 billion banking package in the face of the financial crisis.

Austria has a number of factors working in its favor in the long run, including:

• A well-developed m,arket economy and a high standard of living
• Strong commercial relations, particularly in banking and insurance
• A large service sector

To prevent a downturn from worsening, the country will need to continue restructuring and putting more emphasis on knowledge-based sectors, according to the CIA World Factbook.

• iShares MSCI Austria Investable Market Index (EWO): Yesterday, it was one of the few ETFs that closed higher, up 2.4%; it’s down 19.6% over three months, and 4% below the 50 day-moving-average; Erste Grp Bank, 13.3% of EWO.

Moody’s may lower their Erste Group Bank ratings from Aa3 long-term debt and deposit ratings to C, on concern over financial flexibility. Wal-Street says that the bank may not be able to withstand the expected weakening of their main markets in Central and Eastern Europe, and may require further capital injection measures over the next few years.

Meanwhile, Erste Bank has taken over Weinviertel Savings Bank, with a take over of 99% of the bank, and the deal will be sealed as of February 2009. New Europe says the price has not been unveiled and a 1% interest will remain in the hands of the savings bank’s private foundation. This move would fortify Weinviertel Bank and not affect any current customers.

Banks in Slovakia did business nimbly on New Year’s for the special event of issuing euros to citizens. Alex Schuller and Karel Janicek for Associated Press reports that with the addition of Slovakia, the euro currency will be used by 330 million people with an annual gross domestic product of more than $5.6 trillion.

The decision to join the EU is a wise one, especially as the world economy is at a crossroads. Slovakia is adapting as some citizens in the EU such as Denmark and Sweden are rethinking their countries’ refusal to sign up.

Slovakia has been transitioning from a centrally planned economy to a modern market one in recent years. Major privatizations are nearly complete, the banking sector is almost entirely in foreign hands and the government has helped facilitate a foreign investment boom with business-friendly policies, according to the CIA World Factbook.

All is not lost for investors who want access to Slovakia. You can get investment access through Austria’s ETF, at least. Slovakia’s skilled workforce, and flat tax rate may lead this country to their own ETF soon.

• iShares MSCI Austria (EWO): down 63.2% in 2008