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Eurozone Recovery Leaves Something To Be Desired

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The euro traded steadily at $1.32 on Wednesday morning as investors awaited GDP data for the 17 nation bloc. Most are expecting the figures to show that the region finally exited its longest ever recession, but only narrowly.

GDP for the eurozone is only expected to show 0.2 percent growth with large variation from country to country.

Industrial output data released on Tuesday was at its highest in more than two and a half years. According to the Wall Street Journal, industrial output was up 1.1 percent in the second quarter, the largest quarterly increase since 2010.

Although the data was promising, it also underscored some of the bloc's troubles as it was largely dependent on the largest European economy, Germany. Several other eurozone nations, including France, posted a decline in industrial output.

Related: Benzinga Market Primer for August 14: Futures Lower As Eurozone Escapes Recession

The inconsistency is likely to be mirrored in GDP data as several members continue to struggle with sagging economies and sky high unemployment. The eurozone's plans to create a banking union will be more important than ever for bailout countries like Spain and Greece where lower interest rates set by the European Central Bank are not translating into more borrowing.

With improving economic indicators, many are speculating that the ECB will hold off on providing any additional stimulus over the next few months. The problem with this approach is that the annual rate of inflation is still falling short of the bank's 2 percent target. Germany and Spain both released their inflation figures on Tuesday which fell in line with estimates that the eurozone's inflation as a whole will be 1.6 percent.

Posted-In: European Central BankNews Eurozone Commodities Forex Global Federal Reserve Markets Best of Benzinga

 

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