HomeBusinessEurope's economy is growing...

Europe’s economy is growing again as inflation continues to fall | CNN Business



London
CNN
 — 

The euro area economy is growing again, but may struggle to maintain the momentum for the rest of the year.

Gross domestic product across the 20 countries that share the euro currency rose by 0.3% in the second quarter, compared with the previous three months, according to an official estimate published Monday.

GDP had fallen by 0.1% in the last three months of 2022, and stagnated in the first quarter of this year.

Separately, official data showed that the overall rate of inflation continued to fall this month. The consumer price index for the euro area rose by 5.3%, down from 5.5% in June.

But core inflation — which strips out volatile food and energy costs — was unchanged at 5.5% in July. And inflation for services and unprocessed food ticked up to 5.6% and 9.2% respectively.

Despite the encouraging economic data, there are signs that the region could be heading towards stagnation for the rest of the year.

“Today’s data broadly validates our near-term outlook, which anticipates very weak growth in H2, and a summer moderation in the pace of disinflation followed by a relatively sharp fall in Q4,” analysts at Oxford Economics wrote in a note on Monday.

The euro area economy was hit hard last winter by the huge increase in energy prices that followed Russia’s invasion of Ukraine — but data from Europe’s two biggest economies on Friday had signaled that a recovery was underway.

“Digesting the Putin shock of high energy and food prices, the eurozone economy has regained a little momentum in the last few months,” analysts at Berenberg said in a research note on Monday. “Like the US, the eurozone has so far weathered the recent challenges better than expected,” they added.

However, the bank expects growth to stagnate over the rest of the year, partly as a result of a sluggish Chinese economy, weakness in global manufacturing and a decline in residential construction, capping annual growth at just 0.6%. It’s forecasting average growth to pick up to 1% in 2024.

French GDP grew by 0.5% in the second quarter, compared with the first quarter of this year, beating economists’ expectations, according to official statistics released on Friday. Germany stagnated last quarter, but that was a modest improvement from the previous six months, when Europe’s biggest economy was stuck in recession.

Michael Probst/AP

Containers in Frankfurt, Germany. Europe’s top economy has stopped shrinking but is struggling to grow.

Holger Schmieding, chief economist at Berenberg, said in a Friday note that France’s better-than-expected growth figures were “entirely due to very strong exports,” while domestic indicators of demand “performed much worse,” including a 0.4% drop in household consumption.

“The delivery of a cruise ship to a foreign buyer contributed notably to this one-off gain in exports,” he added.

Demand for business loans in the euro area fell to a record low in the second quarter, according to a survey published by the ECB last week. Separate survey data showed that business activity contracted at the fastest pace in eight months in July.

An initial reading of the Purchasing Managers’ Index, which tracks activity in the manufacturing and service sectors, dropped to 48.9 from 49.9 in June. A reading below 50 indicates a contraction.

The European Central Bank raised the benchmark interest rate in the euro area by a quarter of a percentage point to 3.75% on Thursday, the central bank’s ninth consecutive hike.

But ECB President Christine Lagarde told journalists that she was considering a pause in hiking rates at the central bank’s next meeting in September.

Consumer price inflation has fallen sharply from a record 10.6% in October 2022 but is still well above the ECB’s 2% target.



Source link

Most Popular

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More from Author

Read Now

Fever select Caitlin Clark with No. 1 pick in WNBA Draft

BROOKLYN, N.Y. — Eight days after completing one of the greatest collegiate basketball careers ever recorded, Caitlin Clark was selected with the No. 1 pick in Monday’s WNBA Draft by the Indiana Fever.Clark is poised to not only help the Fever return to the postseason for...

In 1998, Bollywood star killed two blackbucks. A gang still seeks revenge.

Khan has been in the crosshairs of an armed gang since 1998 for shooting two blackbucks on a recreational hunting trip.Two members of a notorious criminal gang have been arrested for firing at the home of Bollywood actor Salman Khan in apparent retaliation for the superstar’s...

14 More Games Land on PS Plus Extra, Premium Today

As always, we ran a Poll over the weekend to gather your thoughts on the line-up, and (almost) as always, one-third of you responded by saying "it's a crap selection". 26 per cent of voters were at least somewhat happy with the selection, with Dave the...

Where Biden’s billions in chipmaking money have gone — and what could be next

The White House announcement this week of up to $6.4 billion in chipmaking cash for Samsung (005930.KS) marks a move to the next phase of the Biden administration's effort to bring semiconductor manufacturing back to the US.The focus so far has largely been on leading-edge logic...

WNBA expansion headed for 16 teams. Portland, Toronto and Philly are options

NEW YORK — The WNBA is looking to continue growing in the next few years. The league intends to reach 16 teams by 2028, commissioner Cathy Engelbert said before the draft, confirming The Athletic report from earlier Monday.The league announced earlier this year that the Bay...

Microsoft Makes High-Stakes Play in Tech Cold War With Emirati A.I. Deal

Microsoft on Tuesday said it would make a $1.5 billion investment in G42, an artificial intelligence giant in the United Arab Emirates, in a deal largely orchestrated by the Biden administration to box out China as Washington and Beijing battle over who will exercise technological influence...

A hockey puck hurtled toward her son’s head. A fan jumped to block it.

Just over a minute was left on the clock during a hockey game in Cleveland Thursday when a player struck the puck, sending it barreling into the stands and toward Asia Davis’s 4-year-old son. That’s when another fan jumped and extended his right arm to block...

Thailand’s Finance Ministry to lead 17 agencies in considering House report on legalizing casinos

Thailand’s Ministry of Finance has been appointed lead agency to consider a House committee study recommending the legalization of casino gaming but will work with 16 other agencies in doing so, local media reports. According to English-language outlet The Nation, the appointment was ordered by way of...

WWE RAW Results Coverage, Reactions and Highlights for April 15, 2024

It’s Monday night, and you know what that means! WWE RAW will go down tonight, and Ringside News has got you covered with live play-by-play results coverage for the April 15, 2024 episode. The start time for WWE RAW is 8:00 PM EST. Match-by-match highlights...

Coachella Weekend 1 Recap, J Balvin’s Out Of This World Coachella Set, Metro Boomin & Future Top Hot 100 | Billboard News

It’s Monday April 15th, Billboard counts down the top 10 on the Hot 100, we’re running down all the headliners and special guest performers and some notable audience members that went down at the first weekend of Coachella, J Balvin gives us a behind the scene...