Eu­ro­zone econ­omy re­cov­ers slightly, growth seen at 0.2-0.5% in Q1-Q3

Financial Mirror (Cyprus) - - FRONT PAGE -

The Eu­ro­zone’s econ­omy is ex­pected to re­cover slightly in 2015, ac­cord­ing to three lead­ing re­search in­sti­tutes.

Gross do­mes­tic prod­uct looks set to grow by 0.4% in the first three quar­ters of the year, ver­sus just 0.2% and 0.3% in the third and fourth quar­ter of 2014 re­spec­tively, said the re­sults of cal­cu­la­tions by the Ifo In­sti­tute (Mu­nich), INSEE (Paris) and Is­tat (Rome).

In the wake of the euro’s de­pre­ci­a­tion, the econ­omy was boosted by an up­turn in ex­ports, cou­pled with ro­bust growth in pri­vate con­sump­tion fu­elled by low en­ergy prices. Dis­pos­able in­come lev­els are also ex­pected to rise. In­vest­ments will in­crease slightly too, stim­u­lated by i mproved lend­ing con­di­tions, ris­ing do­mes­tic de­mand and the need for re­place­ment in­vest­ments. The three in­sti­tutes ex­pect in­vest­ments to grow by 0.2%, 0.4% and 0.5% re­spec­tively in the first three quar­ters of 2015.

Based on the as­sump­tions that the price of a bar­rel of crude oil re­mains at 56 dol­lars and that the euro-US dollar ex­change rate sta­bilises at 1.10, prices are ex­pected to fall by 0.3% in the first quar­ter of 2015. Prices will fall by only 0.1% in the sec­ond quar­ter. A pos­i­tive in­fla­tion rate of 0.1% is sub­se­quently ex­pected for the third quar­ter.

This fore­cast is based on the as­sump­tion that the agree­ment be­tween Greece and its cred­i­tors in the Eu­ro­zone holds firm.

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