Monday, October 31, 2016

Growth in the euro zone remained stable in the third quarter – the State of Minas

The economic expansion of the euro zone has stabilized in the third quarter of the year, at 0.3%, according to data published on Monday, although analysts warn about the consequences of Brexit for the growth of the countries of the single currency in 2017.

The growth of the Gross Domestic Product (GDP) of the 19 countries del euro remained stable at 0.3% in the third quarter of 2016, in comparison to the previous three months, said the european institute of statistics Eurostat, converging with analysts polled by Factset (Research Systems Inc., multinational company financial information).

The euro zone has registered in October a inflation of 0.5%, in rapid progression in relation to the previous month, according to Eurostat, which represents its highest level in 27 months.

For the analyst Howard Archer of IHS, Markit, GDP growth in the euro zone may increase by 0.4% in the fourth quarter compared to the period from July to September, leaving the total expansion 2016 at 1.6%, as estimated in the European Commission in its forecasts of may.

Among the euro countries that have already reported their forecasts for the third quarter, France reported growth of 0.2% of its GDP, after the unexpected retreat of -0,1% in the previous quarter.

According to Archer, Spain registered an “impressive” growth of 0.7%, “despite the stagnation policy” and the slowdown in the second quarter (to 0.8%).

however, we have concerns about the growth prospects of the euro area in 2017,” he added, in reference to the political uncertainty caused by elections this year in the two largest economies of the euro zone, France and Germany, and the possible difficult negotiations for divorce with the United Kingdom (Brexit).

The 19 countries of the euro may register a slowdown of up to 1.4% of its economy in 2017, said the analyst. This would be just a little below forecasts of the International Monetary Fund (IMF), which also reduce the expansion of the euro area of 1.7% in 2016 to 1.5% a year later.

In the 28 countries of the European Union (EU), the growth was 0.4% in the third quarter, stable in relation to the period from April to June of 2016.

- Inflation still low –

The decision of the british in June to abandon the European Union has added uncertainty to an european project weakened since the financial crisis of 2008 and the recent migration crisis, passing by the attacks the extremists.

in Addition to the Brexit, the IMF had warned in early October about the consequences of a low inflation economic activity in the euro zone, it would not meet “until 2021″ the goal of the European Central Bank (ECB) to maintain it close to, 2%.

In October, even though atendir the highest level since June 2014, the increase in prices to the consumption (IPC) stood at 0.5% in the euro area.

The underlying inflation, which does not consider the prices of energy and food has not prepared, remained also low, according to the analysts, for whom the consumers are still reactive spending.

two years Ago, the ECB tries to stimulate the credit with the aim to reactivate economic growth and inflation in the euro area that recorded in August an unemployment rate of 10.1%.

Although inflation remains low and the economic recovery of the countries of the euro does not stabilize, analysts do not expect changes in its asset purchase program, but “an extension of six months (…) until September 2017,” according to the economist Jennifer McKeown, of Capital Economics.


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