The Euro Zone, after witnessing hardships and economic turmoil; beginning from the second half last year, as a result of the economic recession, economic conditions began to show progress and signs of recovery, which have started to become very clear; more specifically starting from the second quarter, where the pace of contraction mitigated to 0.1% from 2.5% in the first quarter.
One of the key growth factors, being the trade balance, suffered tremendously due to the decline in global demand on goods, since many firms reduced their production and expansion plans, as well as embarked on cutting costs to cope with the slowdown in economic activities. As it is well known, many European countries such as Germany rely heavily on their sales overseas.
Nevertheless, with the ongoing efforts done by national governments and central banks; the economic conditions have started to show an advance, where the trade balance in the euro zone has begun to show positive figures again, within the second quarter.
Yesterday, the sixteen nation economy released their trade balance for July, showing a widened surplus to 12.6 billion euros from the revised 5.4 billion euros. In addition, the seasonally adjusted reading's surplus widened to 6.8 billion euros from the revised 2.3 billion euros.
Today, the euro zone will release its current account for July, where the seasonally adjusted reading, which is at a current 5.3 billion euros deficit; whereas, the non-seasonally-adjusted reading is at a 0.3 billion euros deficit, are expected to show an incline after witnessing the improvement in the trade balance, which is the most important component of the current account.
Most probably, global trading is coming back as the recession abates. Governments worldwide have announced a near $2 trillion, as stimulus packages to revive economic growth.
In Germany, sales overseas increased 2.3% from June and exports inclined for the third consecutive month in July. The German economy grew unexpectedly in the second quarter to a 0.3%; leading the recovery in the euro zone. There is an overall improvement in the largest economy in the euro zone.
Earlier today, producer prices for the August came in at 0.5%, higher than the previous -1.5% and the forecasted 0.2%. On the year, the reading also inclined to -6.9%, above both prior and anticipated readings of -7.8% and -7.2%, respectively.
Inflation in Germany and the euro zone has started to incline, leaving fears of deflation behind. Trichet had stated previously, that the economy is in a period of disinflation and that prices will remain negative on the short and medium term due to the negative impact of the downturn.
The ECB cut the key interest rate to a historical low of 1%, to rekindle economic growth and accelerate recovery. Besides, the bank announced unprecedented methods of buying covered bonds worth 60 billion euros starting from July 6, to spur lending and thereby spending.
Moreover, the ECB raised its growth forecasts for 2009 and 2010, as they predict the economy to expand by 0.2% from the prior forecasted contraction of nearly 0.3%, next year; while this year, the euro region will contract 4.1% compared with the previous expected contraction of 4.6%.
However, unemployment is still considered the major threat for the recovery. The unemployment rate is now at 9.5%, the worst since 1999. Trichet had previously stated that the jobless rate will incline in the upcoming period; as one of the repercussions of the economic downswing.
One of the key growth factors, being the trade balance, suffered tremendously due to the decline in global demand on goods, since many firms reduced their production and expansion plans, as well as embarked on cutting costs to cope with the slowdown in economic activities. As it is well known, many European countries such as Germany rely heavily on their sales overseas.
Nevertheless, with the ongoing efforts done by national governments and central banks; the economic conditions have started to show an advance, where the trade balance in the euro zone has begun to show positive figures again, within the second quarter.
Yesterday, the sixteen nation economy released their trade balance for July, showing a widened surplus to 12.6 billion euros from the revised 5.4 billion euros. In addition, the seasonally adjusted reading's surplus widened to 6.8 billion euros from the revised 2.3 billion euros.
Today, the euro zone will release its current account for July, where the seasonally adjusted reading, which is at a current 5.3 billion euros deficit; whereas, the non-seasonally-adjusted reading is at a 0.3 billion euros deficit, are expected to show an incline after witnessing the improvement in the trade balance, which is the most important component of the current account.
Most probably, global trading is coming back as the recession abates. Governments worldwide have announced a near $2 trillion, as stimulus packages to revive economic growth.
In Germany, sales overseas increased 2.3% from June and exports inclined for the third consecutive month in July. The German economy grew unexpectedly in the second quarter to a 0.3%; leading the recovery in the euro zone. There is an overall improvement in the largest economy in the euro zone.
Earlier today, producer prices for the August came in at 0.5%, higher than the previous -1.5% and the forecasted 0.2%. On the year, the reading also inclined to -6.9%, above both prior and anticipated readings of -7.8% and -7.2%, respectively.
Inflation in Germany and the euro zone has started to incline, leaving fears of deflation behind. Trichet had stated previously, that the economy is in a period of disinflation and that prices will remain negative on the short and medium term due to the negative impact of the downturn.
The ECB cut the key interest rate to a historical low of 1%, to rekindle economic growth and accelerate recovery. Besides, the bank announced unprecedented methods of buying covered bonds worth 60 billion euros starting from July 6, to spur lending and thereby spending.
Moreover, the ECB raised its growth forecasts for 2009 and 2010, as they predict the economy to expand by 0.2% from the prior forecasted contraction of nearly 0.3%, next year; while this year, the euro region will contract 4.1% compared with the previous expected contraction of 4.6%.
However, unemployment is still considered the major threat for the recovery. The unemployment rate is now at 9.5%, the worst since 1999. Trichet had previously stated that the jobless rate will incline in the upcoming period; as one of the repercussions of the economic downswing.
