by
N. Peter Kramer
But after the economic growth reports of last week the question appears to be can the block of 18 Euro-countries avoid tumbling back into recession. A report by Eurostat, the official EU’s statistics agency, showed last week that the French economy, the second largest in the Eurozone, is stagnating again. Germany and Italy, the biggest and third largest economies, contracted 0,2% in the second quarter from the first. With its main economies in trouble, the GPD of the 18 did not expand at all from the first quarter when it grew only 0,2 percent. The annual growth for 2014 is now forecast by Eurostat to 0,2 percent…
Another cause for concern from the Eurostat report is deflation: Eurozone consumer prices rose last month just 0,4% percent from a year ago. In the bloc, only prices in Germany and the Netherlands rose , they declined in 15 others; in Malta they were flat. This added to fear that Japan-style deflation was becoming more likely. The current no growth and negative price reality in the Eurozone leaves little hope for restoring jobs, livings standards or for public debt sustainability. The New York based economist, Carl B. Weinberg is not optimistic: ‘As the recovery takes hold in the US, the Eurozone appears stuck in a never ending slump’. The bloc’s GDP remains more than 2 percent lower than its level in early 2008, before the global financial crisis, he said.
In the meantime German businesses have warned that the EU’s economic sanctions against Russia are seriously hurting the German economy. The first Russian counter-sanctions date from after the period Eurostat is reporting about, so the picture for the EU may be even worse…
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