BRUSSELS, Belgium – Economic growth in the eurozone slowed to 0.2% in the 2nd quarter of the year, down from 0.4% in the previous 3 months.
Eurostat’s figures, published Wednesday, July 31, also showed inflation in the 19-nation single currency group dropping from 1.3% in June to 1.1% in July.
This falls even further short of the 2% target of the European Central Bank (ECB) for a healthy economy, and amounts to further evidence of a worrying slowdown.
The seasonally adjusted unemployment rate nevertheless also fell, from a revised 7.6% in May to 7.5% in June, its lowest level in 10 years.
The wider 28-member European Union, which includes countries outside the euro, also saw 2nd quarter growth shrink to 0.2%, down from 0.5% in the previous period.
All the figures will be subject to revision in the months to come, but they were in line with market expectations as estimated by data firm Factset.
Economist Jack Allen Reynolds of consultancy Capital Economics said the weak data would strengthen the case of the ECB to announce “stimulus measures” at its meeting in September.
Last week, the bank signaled that it could lower its already negative interest rates even lower and bring back its multibillion-euro quantitative easing program.
“But while economic weakness had previously been concentrated in Germany and Italy, the national data available so far show that the slowdown in Q2 was broad based,” Reynolds said.
Growth is also now softening in France, Spain, Austria, and Belgium, he warned.
And even the improved unemployment figure could mask underlying economic weakness, he argued.
“Surveys of firms’ hiring intentions suggest that employment growth will lose pace, while other surveys show that labor shortages are easing. So we doubt that wage growth will continue to accelerate,” he said. – Rappler.com
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