22 Jun 2018
Euro-Area Economy Sees Silver Lining as Growth Momentum Picks Up
The much awaited rebound in euro-area growth momentum may have finally begun.
A gauge measuring private-sector activity unexpectedly increased in June, suggesting the economy is gathering pace after a slow start to the year. With output strengthening in the bloc’s two largest economies, Germany and France, the numbers underpin the European Central Bank’s prediction that a rebound is on the cards, even if it arrives later than expected.
But the better figures comes amid the shadow of a looming trade war, with the U.S. and Europe announcing tit-for-tat tariffs on products, and Daimler AG saying that profit will suffer as a result. Policy makers including ECB President Mario Draghi issued warnings this week, while multiple other central banks have singled out protectionism as a threat to the outlook.
Despite that, ECB officials decided last week that it’s time to unwind crisis-era stimulus. A day after the Fed raised interest rates for the second time this year, European policy makers announced they will end bond purchases by December, trusting that heightened global uncertainty won’t derail growth. (Source: Bloomberg)