Italy is contracting after GDP shrunk by 0.20% in the second quarter. But Italy is not the only Eurozone economy with growth going nowhere. France is too. So is Spain.
The only remaining star seems to be Germany, with a 0.8% growth rate in the first quarter, Eric Reguly from the Globe and Mail said. But even the brightest candles eventually burn out.
“It may be a flat-liner in the making,” Reguly added. “Last month, the German central bank warned that the economy probably stagnated in the second quarter and today’s report on industrial orders confirmed that growth is almost certainly waning. German industrial orders fell for the second consecutive month, at a 3.2% rate, following at 1.6% fall in May.”
Western sanctions placed on Moscow over the crisis in Ukraine have had a “weak, fragile and uneven” effect on the recovery, Mario Draghi, head of the European Central Bank said on Thursday.
The Telegraph’s Ambrose Evans-Pritchard said that “Hopes for a swift rebound in Germany are fading. In June, new orders in manufacturing dropped by 0.32%; orders from the rest of the eurozone shrunk by 10.4%.”
“What this shows is that Europe is nowhere close to recovery,” Steen Jakobsen from Saxo Bank told The Telegraph. “Monetary policy has run out of traction,” a reference to the European Central Bank’s yearslong policy of keeping interest rates at close to zero per cent.
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