Europe's recovery takes a backwards step

By Callam Pickering

With unemployment remaining elevated and growing fears about deflation — combined with dysfunctional credit markets and an ageing population — it will take years before the eurozone recovery is healthy enough to warrant tighter policy from the European Central Bank.

According to Eurostat, eurozone real GDP was unchanged in the June quarter, missing market expectations, to be just 0. 7 per cent higher over the year.

Deflation is not an immediate concern but with significant spare capacity remaining throughout the region, it is unlikely that annual inflation will push towards the ECB’s inflation target of 2 per cent for a number of years.

The French economy — the region’s second biggest economy — was unchanged during the June quarter, to be 0. 1 per cent higher over the year.

Read more here: Business Spectator

    

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