Tuesday - Sep 26, 2017

Eurozone’s economic recovery reaches deadlock

Eurozone’s economic recovery reaches deadlock

Eurostat, the European Commission’s statistics bureau, has provided a set of figures that give a clear indication that the Eurozone’s economic recovery appears to be lending to a stuttering halt, a situation which has increased pressure on the European Central Bank to invest in government bonds in order to improve fiscal growth at the same time halting halt the currency bloc’s slide towards deflation.

According to Eurostat gross domestic product for the quarter between April and June was totally static, compared with a growth level of 0.2 per cent in the opening quarter of 2014. Eurostat also confirmed that inflation for the same period dropped to 0.4 per, a four-and-a-half-year low, way below ECB’S target of two per cent.

The poor quarterly figures were this time not only attributed to some of the typical underachievers in the bloc’s membership, but also to some of its more healthy members, in particular Germany, which provides more than a quarter of the Eurozone’s output, whose economy shrank by 0.2 per cent between April and June, its first contraction since the last quarter of 2012.

Also in the doldrums were France who recorded no growth for the quarter, although doing better than Italy who announced last week that they fallen back into their third recession since 2008. On the upside, economy in the Netherlands grew 0.5 percent after contracting between January and March, while Portugal expanded 0.6 percent and Spain increased 0.6 percent.

Economic gloom in the Eurozone, which threatens to intensify the debate for more government-led reform after France is in stark contrast with the return to fortune in the World’s other advanced economies such as the UK, where output has increased by 3.1 per cent over the past year, while the US has grown their economy by 2.4 per cent, compared with just 0.7 per cent for the Eurozone.

Analysts urged the ECB to follow the lead of the US Federal Reserve and the Bank of England and introduce a program of large-scale bond purchases, or a version of quantitative easing, designed to increase liquidity within the Eurozone’s temporarily ailing financial system, with the hope of countering the loss of momentum that the region is suffering from.

Despite the setback, the Zone’s currency, the Euro absorbed the disappointing data, falling only slightly.

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