Skip to main content

Eurozone growth slows as trade tensions persist

Eurozone

BRUSSELS: Economic growth in the eurozone slowed in the second quarter, official data has shown, feeding concerns that global trade tensions fuelled by Washington may be hurting Europe’s economy.

Major economic institutions — including the European Central Bank and International Monetary Fund — have warned that growth in the eurozone risks taking a hit from the rising protectionism that stemmed from the “America First” policies of US President Donald Trump.

The fresh data released Tuesday confirmed the fears with growth in the 19-country single currency bloc hitting 0.3 percent in the April to June period, below the 0.4 percent in the previous quarter, the EU’s Eurostat statistics agency said.

On a year-to-year basis, economic growth in the eurozone reached 2.1 percent, which was far lower than the 2.5 percent in the previous quarter and also weaker than forecasts by analysts.

“Trade uncertainty seems to have already had a significant effect on the Eurozone economy in the second quarter,” said Bert Colijn, Senior Economist at ING bank.

“While the impact on real export growth has likely been small over the second quarter, the confidence factor has been more important,” he added.

European Central Bank chief Mario Draghi on Thursday already warned that “the threat of protectionism” remained a “prominent” risk to eurozone growth and warned that this year may not see a repeat of the bumper 2017.

IMF Chief Economist Maurice Obstfeld warned this month that “the risk that current trade tensions escalate further … is the greatest near-term threat to global growth”.

ECB caution

The data landed days after the European Union and US declared a trade war truce following White House talks, but analysts said the accord was fragile and that the spat could still weigh on growth.

Still, “the fact that the immediate risk of escalating trade tensions has diminished now should support growth throughout the second half of the year,” said Dirk Schumacher of Natixis bank.

The uncertainty over trade helped ECB governors last week decide to leave interest rates at historic lows even though they stuck to plans to halve “quantitative easing” or mass bond-buying from October before ending the stimulus scheme at the end of the year.

This came a month after the Italian banker surprised observers by announcing the ECB will wind down its massive stimulus programme faster than anticipated, before ending altogether it in December.

“We still see growth regaining some pace as the year goes on, but for now the continued slowdown will certainly keep the ECB in cautious mode,” said Jennifer McKeown of Capital Economics.

The caution will be put to the test by the inflation data also released on Tuesday that saw the ECB’s two percent target exceeded.

Eurostat said eurozone inflation accelerated in July to 2.1 percent driven by high energy prices. This was slightly faster than forecast by analysts.

Eurostat also said unemployment in the eurozone remained flat in June, at 8.3 percent.

Joblessness in the area has been falling steadily since it fell below the symbolic threshold of 10.0 percent in September 2016.

However, it is still higher than the average rate before the financial crisis, when it stood at 7.5 percent.

Among the 19 single currency countries, the lowest unemployment rates in May was recorded in Germany at 3.4 percent, according to Eurostat.

The highest rate was that of Greece with 20.2 percent in April, the latest available figure.

Crisis-hit Spain saw its rate fall to 15.2 percent.

Read More: France, Germany close to agreement on eurozone reform

The post Eurozone growth slows as trade tensions persist appeared first on ARYNEWS.

Labels:

Comments

Post a Comment

Popular posts from this blog

Accountability court hears assets case against Ishaq Dar

ISLAMABAD: An accountability court in Islamabad on Wednesday resumed the hearing of a reference filed against former finance minister Ishaq Dar by the National Accountability Bureau (NAB) for allegedly accumulating assets beyond his known sources of income.  Judge Muhammad Bashir is recording the statement of a prosecution witness, Ishtiaq Ahmed. At the previous hearing, the accountability judge had reserved his verdict on an application filed by two co-accused seeking acquittal in the case. Naeem Mehmood and Mansoor Rizvi, who are directors of Dar’s companies, had filed the application requesting the judge to exonerate them from all charges for want of evidence. Qazi Misbah, the counsel for the two co-accused, contended the prosecution has failed to provide compelling evidence to prove the allegations leveled against his clients. The third co-accused President National Bank of Pakistan (NBP), Saeed Ahmed, had already filed an application before the court for his acquittal wh...
Post a Comment
Read more

SFA raids several restaurants in Karachi, imposes fine

KARACHI: The Sindh Food Authority (SFA) on Friday raided several restaurants in city’s North Nazimabad area over unhygienic conditions, ARY News reported. According to the SFA, one of the restaurants was found utilizing the used oil multiple times. The items were also not properly frozen while crockery for serving the food was also not clean. The team imposed a fine of Rs 50,000 on the restaurant. The SFA team found hygiene standards were sheerly compromised in food making to the core. The food inspectors said they had previously served notices to the food outlets, but the restaurant owners apparently turned a blind eye to it. Raids were also conducted in district Malir and Gulshan-e-Hadeed. Sanitary conditions and lack of fumigation facilities were found at the restaurants in some of the Malir outlets. The SFA team also raided a bakery ‘Friend Bakers’ and imposed a fine of Rs 20,000 over poor hygiene.  Similarly another roadside restaurant was fined Rs 20,000 for neglecting he...
Post a Comment
Read more

Trump says US generals feel Beirut blast was likely an ‘attack’

WASHINGTON: President Donald Trump on Tuesday cast a massive explosion in Beirut as a possible attack, despite statements by Lebanese leaders that it was likely caused by highly explosive material that had been stored at warehouses in the capital for years. “The United States stands ready to assist Lebanon,” Trump said at a White House briefing of Tuesday’s explosion, which killed at least 78 people and injured thousands. “It looks like a terrible attack.” When asked later about his depiction of the explosion, Trump said that he had met with some U.S. generals who feel the blast was not “some kind of a manufacturing explosion type of event.” He told reporters that according to these unnamed generals “they seem to think it was an attack. It was a bomb of some kind.” The Pentagon referred questions to the White House. Two U.S. officials, speaking on the condition of anonymity, said it was unclear where Trump was receiving his information but that initial information did not appear...
Post a Comment
Read more