Eurozone GDP Leaves Something To Be Desired
The euro was steady above $1.24, even as GDP data came out showing that the eurozone probably only narrowly avoided a recession in the third quarter. The common currency traded at $1.2453 at 7:00 GMT as investors speculated that the European Central Bank would likely step in based on the latest data reports.
A Reuters survey showed that analysts believe that the eurozone’s economy grew 0.1 percent in the third quarter based on the figures that have already been released for its largest economies. German data was disappointing, with a rise in consumer spending and foreign trade bumping the nation’s GDP up to just 0.1 percent. France performed better than expected with 0.3 percent expansion, but the nation’s second quarter GDP was revised down to a 0.1 percent contraction.
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Inflation is also a worry in the eurozone as many believe that the consistently low figures could eventually slide below zero, pushing the nation into a period of deflation. An ECB report on Thursday showed that the central bank’s analysts saw consumer prices gaining just 0.5 percent this year, revised down from their last estimate of 0.7 percent growth. The report also forecast 2015 inflation at 1 percent and 2016 at 1.4 percent. Though figures above 1 percent would be more encouraging, the figures are still far below the bank’s 2 percent target.
The inflation figures coupled with lackluster GPD will likely put more pressure on the European Central Bank to step in with more stimulus. The bank has been hesitant to do more recently, as it already rolled out stimulus packages over the summer and has said it wants to wait until the effects of those measures can be seen; however, if the bloc’s economic data continues to worsen the bank may be forced to act in the coming months.
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