Europe's weak econ­omy feels the strains of the global slow­down

The Pak Banker - - MARKETS/SPORTS -

The euro area is show­ing signs of strain from the global slow­down. Weaker growth and deeper price cuts by com­pa­nies, as cap­tured in a monthly re­port by Markit Eco­nom­ics pub­lished Mon­day, will raise con­cerns about the health of the econ­omy.

They may also in­crease pres­sure on Euro­pean Cen­tral Bank pol­icy mak­ers to add to stim­u­lus at their next meet­ing in March. Markit said that its com­pos­ite Pur­chas­ing Man­agers In­dex for the euro zone fell to 52.7, the low­est in more than a year, from 53.6. In Ger­many, man­u­fac­tur­ing took a hit from fall­ing over­seas de­mand, while the com­pos­ite gauge for France sig­nalled "slug­gish" eco­nomic growth. "Not only did the sur­vey in­di­cate the weak­est pace of eco­nomic growth for just over a year, but de­fla­tion­ary forces in­ten­si­fied," said Chris Wil­liamson, chief econ­o­mist at Markit in Lon­don. The data "greatly in­crease the odds of more ag­gres­sive stim­u­lus from the ECB."

The Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment cut its fore­casts for the euro re­gion last week, and ECB of­fi­cials are re­view­ing whether their cur­rent stim­u­lus pro­gram is enough to counter global pres­sure. They've ex­pressed con­cern that a re­newed slump in oil prices is adding to risks that low in­fla­tion be­comes en­trenched.

Markit said euro-re­gion eco­nomic growth this quar­ter may fall short of the 0.3 per­cent seen at the end of 2015. Its Ger­man fac­tory in­dex fell to 50.2 this month, barely above the key 50 level that di­vides ex­pan­sion from con­trac­tion. "The Ger­man econ­omy ap­pears to be in the midst of a slow­down," said Oliver Kolod­seike, an econ­o­mist at Markit. Man­u­fac­tur­ing is "near stag­na­tion," he said

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.