The bloc’s employment figures are currently a ray of light in Eurozone data that recently has been far from impressive. The engine room of the Eurozone, Germany has just narrowly avoided recession.
Economic growth in the bloc has slowed to its lowest point since 2014 and purchase manager index forecasts point toward further falls in business activity in early 2019. Forecasts suggest growth could fall below 1.5%.
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The slowdown in growth is being blamed on events outside the Eurozone, such as the current trade war with the US and a global economic downturn.
When Mario Draghi, President of the European Central Bank (ECB) was questioned about the fall in GDP he responded saying it was due to “the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.
Draghi then attempted to ease investor concerns by stating the labour market is in its best position for several years, and he sees the chances of a Eurozone recession as low.
Eurozone unemployment data sits at 7.9%the lowest levels in over ten years.
I am not so convinced, the Euro has problems in several areas. The situation in Greece, which has seemingly been swept under the carpet, Italian debt now has the highest debt in the Eurozone, second only to Greece and also Germany’s recent slowdown.
It is also yet to be seen how the bloc will cope without the aid of Quantitative Easing (QE). The European Central Bank (ECB) recently ceased pumping vast sums of Euros into the economy in December and we are yet to see the knock on effect to the Eurozone.
If it were not for Brexit I think we could expect healthy gains for Sterling against the Euro this year.
Tomorrow we will see the release of GDP data for the Eurozones, it will be interesting to see these figures considering the current economic situation in the bloc.
Quarter on Quarter data is expected to come in at 0.2% and Year on Year at 1.2% down from 1.6%. If the data comes in below expectation, we could see Euro weakness.
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