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Eurozone Recovery Picks up Speed According to Official Statistics

Eurozone Recovery Picks up Speed According to Official Statistics

According to the official statistics, the economy of the Eurozone grew by an unexpected 0.6 percent in the first quarter of the year.

Paris, France, July 12, 2016 — Despite analysts predicting a 0.4% growth in the 19-nation bloc, the Eurozone managed to double the 0.3% rate that was recorded in the last quarter of 2015. This increase was above the expectations of the analysts.

However, data from Eurostat showed that the Eurozone has started to experience deflation. Inflation in the Eurozone, fell to -0.2% in April down from zero in the previous month of March. Other Eurostat data indicated that the employment rate in the Eurozone dropped to 10.2% in March; this is the lowest rate for the past four and a half years.

Uncertainties remain

The latest growth information indicates that the economy of the Eurozone is currently bigger compared to previously eight years ago, prior to the start of the financial crisis.

Recently, the Eurozone has significantly benefitted from the fall in oil prices. Germany, in particular, is the country that has benefitted from this situation most.

Resources have been freed up in some of the region debt economies by the looser budgetary policies implemented by the government.

Steve Rogers, the Director of Asset Allocation at Orix Capital Trading, mentioned that the Eurozone should maintain a growth rate of approximately 0.4% per quarter in the future but they should also be cautioned that the rate could ease towards the end of the second quarter in June.

“Global economic problems and uncertainties are still an impairment for Eurozone progress, not only via limiting exports but also by reducing business consumer confidence,” Rogers said.

“Other uncertainties that could impede the growth of the Eurozone are the possibility of the UK leaving the European Union (EU) in June and the recurrent terrorist attacks,” he added.

ECB Action
The inflation figures reflected that the price of processed food still rose by 1.2% in April despite energy prices falling by 8.6%. By stripping out these items, the core inflation rate indicated that consumer prices went up 0.8% year on year in the month of April.

Ichiro Hoshi
Orix Capital Trading
Tokyo, Japan

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