Hopes are mounting that this week could be the one that finally sees the Eurozone drag itself of the longest recession in the currency bloc’s 14-year history, with GDP figures expected to show growth for the first time since 2011.
A year of relative calm in the financial markets, austerity measures in many indebted countries and an improving picture in the United States, the world’s largest economy, has boosted hopes that the Eurozone is due to begin a recovery.
“The external environment is really getting better, led by signs that US demand is picking up. The second quarter should mark the end of the recession in the Euro area, but the recovery will be excruciatingly slow. We’re not getting the champagne out yet” said Nick Kunis, head of macro research at the Amsterdam based ABN Amro Bank.
According to the Luxembourg based European Union Statistics Office data due for release on Wednesday will show that GDP for the 17-nation region expanded by 0.2%.
Signs of growth have flickered into existence as unemployment finally halted its rapid climb in the overall region. Economic confidence is also gaining strength and manufacturing expanded for the first time in two years.
The signs of improvement must be regarded with caution however, as it is as per usual Germany leading the way. Compared to places such as Greece, Spain and even France, Germany is outperforming them all as the Euro continues to favour the manufacturing giant.
Adding to hopes of a recession exit are the signs that the rest of the world is making a recovery. China’s slowdown has apparently run its course, the USA continues to improve and the UK economy is showing signs that it’s strengthening.
“What we saw last week was that the figures from China lent some support to the feeling in the market that the slowdown (in China) is over,” said Rabobank economist Elwin de Groot.
“I am a little bit careful though, these are still early days … but once Asia begins to re-accelerate then that is good for Europe.”
Despite the signs of improvement the Eurozone has a long way to go. Unemployment in Greece reached a new record high last week, industrial output plummeted in France and Spain is doing all it can to distract people from its economic problems by renewing hostilities with the UK over Gibraltar.
Cyprus remains in dire straits following its bailout and several other countries remain at high risk. With the German elections due to be held in September we can also expect the markets to get jittery once more.
Current Euro (EUR) Exchange Rates
As of 11:30 am
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3300 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8599 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4531 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6630<
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3712 <
