Is the Euro Zone Economy Showing Signs Of Life?

 
on March 11 2013 12:23 PM
Euro Zone
Euro zone GDP probably stopped contracting in the second quarter after a record six quarters of decline. Reuters

The Organization of Economic Cooperation and Development or OECD revealed that the euro zone economy, which is made up of 17 different nations, caught some wind in January, amid depressing and downbeat projections regarding the state of the financial health of the region.

Although slight, a pickup in exports from Germany, the zone’s largest economy, helped carry the rest of the bloc. There is a significant disparity among the countries in the zone, but the indicators reported and calculated by the OECD offer cautious optimism to the region which has been devastated by setback after setback in its efforts to recoup from the debt crisis. The indicators rose from 99.6 to 99.7, following another increase back in December. A reading above 100.00 for a leading indicator means economic growth is set to be above the trend rate, which itself varies widely among large economies, The Wall Street Journal reported.

The euro zone experienced economic contraction during the last three months of 2012, and that pattern was expected to continue into 2013. However, the new numbers show that the lead indicators are pointing to a return to growth later in the year.

Germany showed a surprisingly dramatic uptick, registering a 99.6, up from a 99.2. Data showed German exports in January rising at their fastest month-to-month rate in five months, at a rate of 1.4 percent. Germany, being the euro zone’s largest economy, will likely be paving the way for growth in the future, since other countries in the area did not perform as well. The second largest economy, France, is still struggling; Prime Minister Francis Hollande’s administration was forced to delay its austerity targets for 2013, including slowing the annual rise in debt to 3 percent of the gross domestic product.

Italy, Greece, and Portugal were among the hardest hit by the recession, and still have a long way to go before they are anticipated to experience significant growth. All three countries experienced continued shrinking in the last quarter and remain on the bottom rung, as the larger, more stable economies continue to carry their weight.

Copyright Wall St. Cheat Street. All rights reserved.

Share this article