http://www.bloomberg.com/news/2013-02-22/eu-says-euro-zone-to-shrink-in-2013-as-unemployment-rises.html
The Euro-area economy will shrink in back-to-back years for the first time. According to the Brussels-based commission report, the GDP in the EU region will contract 0.3 percent this year and the unemployment will climb to 12.2 percent. Germany will once again play an important role in the recovery. Due to a drop in euro-area demand, German economy is now predicted to grow only 0.5 percent comparing to 0.8 percent. This is not a good sign for the whole region. The domestic demand and investemnt are not expected to improve until 2014, but the prognosis for 2014 is promising. Until demand and investment become main drivers of economic growth EU authorities will be working on other plans of improving the situation in the region.
It's interesting that the mighty German economy is really started to feel the heat regarding supporting most of the weight of the EU. This will indeed be a testing time for the EU and if they get their act together and reduce some of the burden on Germany.
ReplyDeleteAlthough this seems unsettling, Germany's business climate index climbed to 107.4 from 104.3 for the fourth straight month, suggesting that at least Germany will be okay for now. It will be interesting to see if the EU can recover in the future, hopefully without relying so heavily on its more powerful Nations.
ReplyDeleteThat is a good point but as an important leader in EU, Germany has a significant effect on the other economies. While Germany might be doing well according to the index, German economy has contracted and lawmakers are divided heavily on whether they will continue funding EU's debt. I think EU will recover and euro will be saved as it has been the main goal of creating EU, but it will take very strict austerity measures to continue and people in countries like Greece, Portugal, Spain and others will be affected the most.
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