EU’s 2014 Economic Prospects

Written by | Friday, November 8th, 2013

Eurozone business activity was slower in October than in months before. Although the slowdown was not significant, it was big enough to cast shadow over hopes for a strong economic comeback. The eurozone finished an unprecedented 18-month recession in the second quarter growing at 0.3 percent, but latest data have pointed out that even the pace of 0.8 percent can be thanked for.
Markit Economics, which developed the closely-followed Composite Purchasing Managers’ Index (PMI), said that the fragile growth rate is being maintained by the manufacturing core of the EU – Germany and also partially by stabilizing France. The country has also reported new job positions opening.
Even though the enhancement of the initial estimate was happily accepted, Markit chief economist Chris Williamson commented that the “loss of momentum raises concerns that the upturn is faltering.” He added that the most recent data would mean some sober reading at ECB, which occurred just a day after the EU Commission decreased its 2014 estimate from 1.2 to 1.1 percent. Moreover, several other think-tanks and economic instituted have announced that even the updated growth prognosis of the EU Commission seems to be too optimistic.
For instance, Howard Archer, an analyst at HIS Global Insight, said that the eurozone was very unlikely to relapse into recession, yet slow would be very modest. He added that the real impetus for the recovery should consist in flexible monetary policy, low inflation, and increasing confidence in industries and sectors.

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