Eurozone recession subsides

Conference organised by the JRC “Scientific Support to EU Growth and Jobs: Efficient buildings, vehicles and equipment”, followed by the 2013 Greenlight Awards Ceremony. Máire Geoghegan-Quinn, Member of the EC in charge of Research, Innovation and Science in the podium. (EC Audiovisual Services).

According to the €-coin index the euro area growth remained negative for the 18^th month in a row in March 2013, after the index turned negative in October 2011. The index measures the level of economic activity in the entire Eurozone and predicts GDP developments some months before the official data appear. The only positive development over the recent months is that the €-coin index kept rising in March 2013 for the fourth month in a row reaching now -0.12%  in comparison to -0.20% in February.

The source compiling the index attributes this improvement mainly on the rise in share prices over the span of this current month, which more than offset the effect of the decline in the indices of business confidence. €-coin is a real-time, monthly estimate of Eurozone-wide GDP growth, computed each month by the staff of the Banca d’ Italia, the central bank of Italy. It provides a single number summarizing the current economic picture for the euro area.

The competent services of the bank stated that, “the index collates a large collection of statistical data, (industrial production, business surveys, stock market and financial data, demand indicators, and more) and extracts the information that is relevant to forecast GDP. It tracks underlying GDP growth, preceding official GDP releases by several months.

The Centre of Economic Policy Research of the Banca d’ Italia that compiles the index estimates that essentially, the index:

(i) gives a monthly “smoothed” estimate of quarter-on-quarter GDP growth in the euro area;

(ii) highlights the underlying trend by adjusting the growth rate for short-term fluctuations and measurement errors; that is, the index figure is an indicator of the euro area’s actual growth momentum”.

Always according to the same source the negative trend in Eurozone’s GDP peaked in August 2012 with -0.33%, but after that month the index remains negative but the negative measurement steadily declines. If the same trend continues the index may soon turn into the positive area. However given the fragility of Eurozone’s recovery this positive tendency may be easily reversed.

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