Euro-Area Economy Shrinks in Q2

The currency bloc's GDP declined 0.2% from Q1 levels, with at least six nations in recessions.

The euro-area economy shrank in the second quarter after the worsening debt crisis and tougher budget cuts forced at least six nations into recessions.

Gross domestic product in the 17-nation currency bloc fell 0.2 percent from the first quarter, when it stagnated, the European Union’s statistics office in Luxembourg said today. That’s in line with the median estimate of 35 economists in a Bloomberg survey. The contraction was softened by stronger-than-forecast growth in Germany, the region’s largest economy.

Economic Outlook

Recent indicators suggest the economic slump may deepen in the current quarter. Euro-area services and manufacturing output contracted for a sixth month in July and unemployment held at a record of 11.2 percent in June. German investor confidence fell to the lowest this month since December 2011.

Policy Response

With the fiscal crisis weighing on sentiment and eroding growth prospects, policy makers have been under pressure to step up stimulus measures. The U.S. Federal Reserve pledged earlier this month to take new policy steps as needed to promote stronger growth and employment. The Bank of England held its key rate at 0.5 percent and its bond-purchase target at 375 billion pounds ($589 billion).

Page 2 of 3

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments

Advertisement. Closing in 15 seconds.