|09-05-2014, 01:58 PM||#1|
Growth data to show Eurozone economy fails to grow in second quarter
Euro-area’s growth data will top the today’s economic releases, with second-quarter Gross Domestic Product (GDP) figure for the Eurozone as whole set to be released later in the day.
Just how fragile the Eurozone economic recovery has been will become clearer on Friday when Eurostat releases its second-quarter estimate for Gross Domestic Product (GDP).
Growth numbers will present a mixed picture; with news the block’s poor performance in the second quarter weighed by a poor performance in the German and French economies, which together constitute 66 per cent of GDP output in the Eurozone area.
According to forecasts the economy of the 18-nation currency union Gross Domestic Product (GDP) was flat in the second quarter of 2014, compared with growth of 0.2 percent in the previous three months.
Escalating geopolitical tensions with Russia damaged confidence in Germany, contributing to a 0.2 per cent fall in economic output – the first contraction since the end of 2012. The German economy accounts for almost 30 per cent of Eurozone GDP.
France’s economy stagnated, while Italy has fallen into its third recession since 2008, meaning none of the eurozone’s three biggest economies registered any growth in the second quarter.
In the previous session, the European Central Bank has cut its interest rates and announced a new stimulus program that involves buying financial assets, a bid to salvage a weak economic recovery.
Unexpectedly, the ECB’s Governing Council, chaired by Mario Draghi, voted to cut its three key interest rates, as follows:
- Main refinancing operations rate cut to 0.05% from 0.15%
- Marginal Lending rate cut to 0.30% from 0.40%
- Deposit rate cut to -0.20% from -0.10%
Also, the ECB cut its growth forecast for 2014 to 0.9 percent from 1.0 percent previously. It lowered its inflation forecast for the year to 0.6 percent from 0.7 percent.
Currency wise, euro was flat at $1.29440, extending losses. The EURUSD pair so far hit session low at $1.29216 after opening at $1.29434. Thursday`s news pushed the euro down to $1.2995, its first time below $1.30 since July 2013.
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