Once again this week the perilous state of the “recovery” in the Eurozone economy was thrust centre stage with the publication of GDP figures from across the region. These revealed a contraction in the powerhouse German economy and stagnation in France. Bloomberg economists now predict the Europe wide figure for Q2 2014 likely to be just above the flat line at 0.1%, perilously close to recession, again.
The contraction in the German economy comes close on the one seen during 2013 with politicians blaming “seasonal factors” this time. However, the political tensions surrounding the Ukraine crisis between Russia and the EU are also likely to be a factor going forward as sanctions begin to bite on both sides. Furthermore, the majority of analysts are anticipating falling demand for German factory goods across both the EU and emerging markets and thus pointing to a weak third quarter in 2014 for the German Economy.
All this poor data follows relatively hard on the heels of disappointing PMI numbers too that were published at the turn of the month. They made clear that the Eurozone economy was slowing further.
Chris Williamson of Markit, the company who compile the PMI data survey said:
“Output and orders are growing at lacklustre rates compared to earlier in the year, meaning firms remain reluctant to take on more staff,” & “The weakness of demand in turn meant companies were generally unable to raise prices for their goods without fear of losing sales…”
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