Powered By

Breaking News

Euro zone economy predicted to show worst slump in four years

Publish Date06/03/2013 06:49:37 AM

Last Update06/03/2013 06:59:29 AM

Euro zone economy predicted to show worst slump in four years

The euro area economy is heading towards its steepest downturn in almost four years, dragged by slumping output in Germany, France and Italy in the fourth quarter of 2012, government data may show on Wednesday.

A preliminary reading of the Gross Domestic Product in the euro area probably tumbled 0.6 percent in the fourth quarter from the previous three months. That is the worst performance since the depths of the recession in 2009.

While uncertainty is still dominating the outlook of the 17-nation currency bloc amid rising unemployment, the European Central Bank warned that "downside" risks remains, signaling the region is not out of the woods yet.

Nonetheless, confidence towards the euro has improved in the past few months and the ECB was somewhat optimistic about the still fragile recovery, suggesting the 17-nation euro economy will pick in the second half of this year.

February data suggested the downturn in business activity has steepened, contrasting a slowing trend which had been evident in the three months to January. But the rate of decline remained less severe than seen in any of the nine months prior to January.

Economists believe the worst of the crisis is over, while the region looks set to see a much smaller drop in GDP in the first quarter compared to unexpected 0.6 percent decline. But the forecast clearly depends on the German and French output.

According to Markit, recent survey signal a worrying divergence between the two nations, while Germany is on track to see the strongest quarterly growth in almost two years, but France is shrinking at the fastest rate for four years until now.

German and Irish growth in business activity is expected to slowly push the single-currency bloc onto the shores of safety by end of the year, although the ECB has forecast that the euro zone`s economy will contract 0.3 percent this year.

Poor GDP data might fuel concern that the ECB will cut the benchmark interest rate, however most still believe tomorrow`s meeting will end with the 0.75 percent rate unchanged, but in the near future, an interest rate cut remains quite an option!

The euro rose slightly for the third day against the dollar following a lousy performance last week. The single currency continued to trade near $1.30 ahead of the ECB meeting while Italy’s political deadlock continued to risk the future of the bloc.

Comments

Member Account Required
You must be registered as a member of the forums and logged into your account to post messages. If you do not have a member account, please Sign In or Register.
Markets
United States
Europe
Asia Pacific
Calendars
Economic Calendar
Holiday Calendar
ECB Calendar
Feds Calendar
BoE Calendar
Boj Calendar
News
Top News
FX Updates
Market News
Stocks
Commodities
Global Highlights
Political News
Around the World
Analysis
Opinions
Studies
At A Glance & Video Commentaries
Market Pulse
Community
Forum
Chat
Blogs
Press Releases
icn.com
About Us
Advertising
Contact Us
Privacy Policy
Terms of Services

Risk Disclaimer : All information on this page is subject to change. The use of this website constitutes acceptance of our Privacy Policy and Terms of Service. Please read our Privacy Policy, Risk Disclaimer, Terms of Services and all legal disclaimers. Please note that Forex trading (OTC Trading) involves substantial risk of loss, and may not be suitable for everyone.


Opinions expressed at ICN.com are those of the individual authors and do not necessarily represent the opinion of ICN.com or its management, shareholders, affiliates and subsidiaries. ICN.com has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and ICN.com is not accountable for their input. Any opinions, news, research, analysis, prices or other information contained on this website, by ICN.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. ICN.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market prices, meaning prices are indicative and not appropriate for trading purposes. ICN.com does not bear any responsibility for any trading losses you might incur as a result of using this data.


©2012 ICN.COM. ALL RIGHTS RESERVED