Ger­many at heart of mod­est growth in euro­zone

Jamaica Gleaner - - BUSINESS - – AP

THE 19-COUN­TRY euro­zone stum­bled to an­other pe­riod of muted growth in the third quar­ter, as solid growth in coun­tries at the heart of Europe’s debt cri­sis over the past few years, such as Greece and Spain, wasn’t enough to make up for a slow­down in eco­nomic heavy­weight Ger­many.

In a de­tailed coun­try-by-coun­try as­sess­ment of the July to Septem­ber pe­riod, the Euro­pean Union’s sta­tis­tics agency con­firmed on Tues­day that the 19-coun­try euro­zone as a whole grew by a quar­terly rate of 0.3 per cent for the se­cond quar­ter run­ning.

That equates to an an­nu­alised rate of around 1.2 per cent – way short of the sort of growth that will see wide­spread in­creases in liv­ing stan­dards and sus­tained falls in the num­ber of unem­ployed.

The fig­ures from Euro­stat showed that the mod­est pace of growth was largely due to a slow­down in Ger­many, the sin­gle cur­rency bloc’s big­gest econ­omy. Growth in Ger­many halved to 0.2 per cent dur­ing the pe­riod.

Growth was also 0.2 per cent in France, the euro­zone’s se­cond-big­gest econ­omy. That, how­ever, rep­re­sented a mod­est im­prove­ment from the se­cond quar­ter’s 0.1 per cent de­cline.

There were some high­lights in the fig­ures, though, largely re­lated to those coun­tries still deal­ing with the af­ter­math of a debt cri­sis that at one time had threat­ened the end of the euro cur­rency.

Greece, in the mid­dle of its third in­ter­na­tional bailout, grew by a quar­terly rate of 0.5 per cent, while Spain ex­panded by 0.7 per cent – wel­come news for the two coun­tries with the high­est un­em­ploy­ment rates in the re­gion at around 23 per cent and 19 per cent, re­spec­tively.

Por­tu­gal, which also re­quired an in­ter­na­tional bailout, did even bet­ter, grow­ing 0.8 per cent dur­ing the quar­ter.

In­di­ca­tors sug­gest that all three coun­tries en­joyed a bumper sum­mer tourism sea­son, partly be­cause many hol­i­day­mak­ers switched from other hotspots in the Mediter­ranean such as Egypt, Tu­nisia and Tur­key fol­low­ing a string of deadly at­tacks.

Any pickup in the over­all rate of growth in the euro­zone as a whole over the com­ing quar­ters rests less on those pe­riph­eral coun­tries than those at the core, no­tably Ger­many. Ger­man Chan­cel­lor An­gela Merkel

ING economist Carsten Brzeski said the Ger­man fig­ures in­di­cate the coun­try is ex­pe­ri­enc­ing a “soft land­ing” and headed for a pe­riod of “solid, though pos­si­bly sub-trend” growth in the quar­ters ahead, driven by the do­mes­tic econ­omy.

How­ever, he warned about po­ten­tial “down­side risks” to the Ger­man econ­omy stem­ming from any pro­tec­tion­ist mea­sures due to ei­ther the new US gov­ern­ment un­der Don­ald Trump or Bri­tain’s de­ci­sion to leave the Euro­pean Union.

There are signs that last week’s elec­tion of Trump as the next US pres­i­dent is al­ready hav­ing an im­pact. In a sur­vey of Ger­man in­vestor sen­ti­ment pub­lished Tues­day by the ZEW in­sti­tute, there were in­di­ca­tions re­spon­ders were “less pos­i­tive” than be­fore Trump’s elec­tion.

“This sug­gests that, de­spite the re­cov­ery in fi­nan­cial mar­kets from the ini­tial shock of the re­sult, in­vestors are still con­cerned about its global im­pli­ca­tions,” said Jack Allen, Euro­pean economist at Cap­i­tal Eco­nom­ics.

Newspapers in English

Newspapers from Jamaica

© PressReader. All rights reserved.