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Eurozone growth makes an unexpected rally after gloomy forecasts | business


Spain's economy is expanding rapidly and turn in the recession-stricken Italy increased eurozone growth to 0.4% in the first three months of this year, according to official estimates.

Currency bloc's 19 members to two times the rate of expansion in the last three months of 2018, when GDP growth slowed to just 0.2% and the European Central Bank was forced to back down on plans to increase the cost of borrowing.

Unexpected increase cheered markets on the continent, but failed to dispel fears that major economies in Europe will struggle to grow this year against the backdrop of political uncertainty and industrial decline.

Jack Allen, an economist at Capital Economics, said: "The continued weakening of timely indicators of research shows that the pick-up in GDP growth in the eurozone will not be sustainable. We continue to believe that the economy will grow more slowly in the second quarter and extend less than most forecasters expect a whole in 2019 ".

Rising oil prices are also expected to apply the brakes on growth, after rising from $ 50 (£ 38) in January to $ 74 per barrel of Brent crude oil at the beginning of this month. Price increased on Tuesday by 1% to $ 73 a barrel before falling back slightly, as oil prices recovered from the short side last week.

Increased probability of Libya's oil recovers after a long coup and US President determined to Donald Trump to curtail Iranian oil supplies increased concern on the world markets of oil shortage.

Meanwhile, trade negotiations in Beijing between the US and China were resumed, adding to fears that the world's largest and second-largest economy may strengthen the tariff war, which has already hit the world trade.

Trump threatened to slap tariffs on $ 11 billion of European goods in response to the subsidies for the Airbus, the European aerospace and defense group, which he claims to & # 39 are harmful to the United States.

While the threats weighing on the minds of European investors, increased unemployment and business expenses to cheer up after a decline during 2018.

Growth in Spain, the fourth largest economy of the region, rose by 0.7%. The Italian economy grew by 0.2% in the three months to March to escape the recession of two quarters, the agency Istat.

The 10-year bond yield of Italy, which is a & # 39 is a proxy for its borrowing costs fell to 2.56%, compared with 3.6% in November last year.

These are likely to bring some relief to the coalition government of Italy, which is struggling to hit the ambitious growth targets agreed with Brussels to limit the budget deficit is increasing government spending and support.

"The bottom line is that we should raise today is quite decent growth rates, although we must not get carried away. It's still early, "said Marco Valli from Unicredit in Milan.

Analysts said Germany, which publishes data on GDP for two weeks, most likely, phase of recovery after the recession, which almost resulted in Europe's largest economy to stall speed in the past year.

"By and large, the conditions necessary for industrial turnover this year fall into place," said Florian Hense with Berenberg Bank in Germany.

"Over the past few weeks, the US-China trade tensions eased, the news from China offered Chinese stimulus may have started to work and the risk of an immediate hard Brexit retreated," he said.

The first estimate of UK GDP growth in the first quarter will be published next week.

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