Euro zone Economies: Trying the way OUT!!
16 country economic merger which was on the verge of collapse few months ago is now finally gaining some momentum. Instability in the region had almost made double dip seem inevitable. Greece, Spain, Argentina and other peripheral economies of Euro zone were in deep mess and had to be bailed out by core economies like France and Germany. But the recent data on unemployment and inflation suggests that austerity measures have finally started to pay-off. Inflation for euro zone stood at 1.7% which is a 20-month high. This was according to the ECB’s measure to keep inflation close to 2%.
Meanwhile unemployment still remains at 10% and finding first job is a nightmare for graduates in European countries.
Unemployment continues to grow in the countries like Spain and France. Unemployment in Spain has reached 20.9% which is the highest rate of unemployment in Euro Zone. Only economy showing some positive development in job market is Germany, the largest of all Euro economies, where employment has started to come down.
ECB expects Euro Zone to expand this quarter when detailed results of Q2 growth come out. ECB is looking at rolling back the pumped in money to avoid high inflation and instability in future. Interest rates are still at all time low in the region at 1% and it seems ECB may not raise it till the worries about euro recovery remain. Weak euro in past few months have helped boosting industrial output but this may not remain same as Euro again gains strength with the economic recovery. Recent stress test results have made investors more confident. Only 7 banks out of 91 under stress test failed. Positive news in recent months have helped stock markets to advance in past few days
but it would be hard to sustain the rally if Q2 results disappoints in any way because investors have become super cautious and markets remain very volatile.