Economic growth in the Eurozone suffered another setback during the 2nd Quarter, as Preliminary GDP data from France showed stagnation at 0.0% q/q, and the Preliminary growth data from Germany came in below forecast at 0.4% q/q. This disappointing news reinforces some of the economic weakness that is still present in the 17-bloc region, which could threaten global recovery.
These figures were reported amid international concerns about the the state of China’s financial market, which has been a monumental contributor to global growth for the last 10 years. Gross domestic product for the entire Eurozone weakened to 0.3% from 0.4% in the first quarter, which fell short of market expectations of a gain of +0.4%. GDP grew at an annualized basis of only 1.3%, according to Eurostat.
Andrea Tomat, chief executive of Lotto Sport Italia SpA in Northern Italy, stated, “In Europe, we have regained a certain level of stability since the height of the crisis, but we see no sign of acceleration.” He also said that in many Eurozone countries, “unemployment is still very high, and consumers are still spending a lot cautious.”
“The fact that Eurozone countries aren’t benefiting from this stimulus cocktail doesn’t bode well for the rest of the year,” said Carsten Brzeski, and economist at ING Bank.
Although the numbers were reported weak, it drew very little reaction from the currency market, as stocks were barely changed, and the euro was trading around a tight range for half of the trading session.
A legitimate concern that many economist have, is that this weak economic output in the eurozone is coming during a time when the 17-bloc nation is being boosted by massive stimulus in the form of a low euro exchange rate, weak oil prices, and a EUR1 trillion bond-purchasing program by the ECB.
Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.