Eurozone needs more than some decimals of growth

László Andor, Member of the European Commission in charge of Employment, Social Affairs and Inclusion, (1st from the right) went to Riga where he was received by Valdis Dombrovskis, Latvian Prime Minister (1st from the left). Inna Šteinbuka, Head of the Representation of the EC in Latvia (2nd from the right), (EC Audiovisual Services, 03/06/2013).

László Andor, Member of the European Commission in charge of Employment, Social Affairs and Inclusion, (1st from the right) went to Riga where he was received by Valdis Dombrovskis, Latvian Prime Minister (1st from the left). Inna Šteinbuka, Head of the Representation of the EC in Latvia (2nd from the right), (EC Audiovisual Services, 03/06/2013).

Despite the ambivalent mood within and without Europe for the euro area’s economic prospects, some factual developments do not seem to be discouraging. For one thing the Commission gave yesterday the green light for Latvia to adopt the euro and join the Eurozone as from 1 January 2014. The solid decisiveness of this country during the past few difficult years to join the Eurozone is a vote of confidence for the single money area.

Passing now to the latest data on the evolution of Eurozone’s GDP, Eurostat, the EU’s statistical service, found that during the first three months of 2013 it moved slightly below the zero change level. According to this source, “GDP fell by 0.2% in the euro area during the first quarter of 2013, compared with the previous quarter… In the fourth quarter of 2012, the growth rate was -0.6%”.

In view of this the obvious comment is that the rate of fall of GDP from the last quarter of 2012 to the first quarter of this year decreased substantially from -0.6% to -0.2%. This is not a small thing, but not a great achievement either. The rate of fall between the two quarters was reduced to one-third and in 2013 came much nearer to the zero change level. If the same tendency continuous throughout this year, it is highly possible that those who predict real growth, albeit small, during the second half of 2013 will be justified by real developments.

It is interesting to note also that in the first quarter of 2013, household final consumption expenditure rose slightly by 0.1% in both the euro area and the EU27. In any case the most important segment of total demand, which is consumption, remains in the positive level. Not to forget that consumption formulates more or less the ¾ of the GDP. If the consumption path remains above the zero level all along this year it is highly possible that Eurozone will finally abandon the recession area and enter into a new growth period. The large discrepancies however between north and south will persist.

Unfortunately not all indicators move to the positive direction for Eurozone. Retail sales remain in the negative region. According to Eurostat, “In April 2013, compared with March 2013, the volume of retail trade fell by 0.5% in the euro area and by 0.7% in the EU27. In March retail trade sales decreased by 0.2% and 0.1% respectively”. In this case the negative pace seems to have increased from March to April. This development however is in a direct antithesis with the positive course of consumption. Theoretically, those two variables, consumption and retail sales, are measuring almost the same thing.

Negative developments in Eurozone are also recorded in the course of gross capital formation. Always according to Eurostat, during the first quarter of 2013, “In both the euro area and the EU27, gross fixed capital formation contributed negatively to GDP growth (-0.3 percentage points and -0.2 pp respectively), while the contributions of household final consumption expenditure and change in inventories were neutral in the euro area (0.0 pp each) and slightly positive in the EU27 (+0.1 pp each)”.
Taking all that into account there is no doubt that Eurozone’s economy is not growing.

It is more discouraging though to observe, that even if the euro area as a total enters in a slow growth course during the second half of the year, unemployment in the recession stricken countries of the south will remain around its present levels. Actually the jobless rates are predicted to increase in Greece, Spain, Italy and Portugal.

In reality an eventual positive overall development in the rate of change of the GDP towards the end of the year, will mean almost nothing for those countries. Without ground-breaking policy changes and in the absence of wide-ranging growth supporting measures, Eurozone will remain as fragmented as ever in every respect. It is an absurdity to think that substantial parts of entire populations could seek and find jobs in the north.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Community Manager – 1289

What is ‘South-South cooperation’ and why does it matter?

Top UN rights official urges transparent probe into Khashoggi disappearance

Why the UN is investigating poverty in the United Kingdom

TTIP fight round 6: last chance for the negotiators to finally open up as they touch the Brussels ring

Fresh airstrikes kill dozens in conflict-ravaged Syria

EU to scrutinise foreign direct investment more closely

M360 Security for 5G: Security for 5G Predictions 2020, in association with The European Sting

Three ways China can make the New Silk Road sustainable

Superconductors: the miracle materials powering an energy revolution

UN genocide adviser welcomes historic conviction of former Khmer Rouge leaders

Draghi: A bridge from Brussels to Berlin

Why economic growth depends on closing the interview gap

MEPs call for EU Magnitsky Act to impose sanctions on human rights abusers

A new crop of EU ‘Boards’ override the democratic accountability and undermine the EU project

2019: An unpredictable, confrontational and financially ominous year

World must do more to tackle ‘shadowy’ mercenary activities undermining stability in Africa, says UN chief

New UN Global Climate report ‘another strong wake-up call’ over global warming: Guterres

What we need for a better European Solidarity Corps

Human Rights: breaches in Cambodia, Uganda and Myanmar

How blockchain can cut the cost of new medicine

What’s going on in Chernobyl today?

Hundreds of thousands of lives still lost each year to small arms, UN conference hears

Don’t underestimate the power of the fintech revolution

Who cares more about taxpayers? The US by being harsh on major banks or the EU still caressing them?

‘Chance for peace’ in South Sudan finally within reach, declares UN Peacekeeping chief

Dangers of poor quality health care revealed ‘in all countries’: WHO report

Thousands flee fresh violence in South Sudan, many ‘suffering from trauma’

Most US students aren’t learning about climate change. Parents and teachers think they should

European Youth Forum on Summit on Jobs and Growth

America writes-off Iran, blocks Europe’s Tehran talks

Venice will now start charging tourists an entrance fee

Japanese banks to move their European HQ from London to Frankfurt after Brexit

Brexit uncertainty keeps shaking the world’s financial markets

Eurozone: How safe are our deposits? Which banks will survive?

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

Maduro ‘brings the truth’ about Venezuela to UN Assembly; says he is ready to meet US President Trump

Eurozone’s north-south growth gap to become structural

Why France, Italy and the US press Germany to accept a cheaper euro and pay for Greece

‘Crippling to our credibility’ that number of women peacekeepers is so low: UN chief

Primary Healthcare should be strongly connected with initial education

Is our brave new world about to burst?

“The Arctic climate matters: to what degree?”, a Sting Exclusive co-authored by UN Environment’s Jan Dusik and Slava Fetisov

New migration pact highlights key role of business in protecting migrants, say UN experts

Governments should step up their efforts to give people skills to seize opportunities in a digital world

Four ways we can fix economics in 2019

EU Budgets: Europe hoping for Xmas gifts

If this is Globalization 4.0, what were the other three?

Commission facilitates the activities of ‘merchants of labour’

How music can help children with autism connect

Ministers for Youth miss the opportunity to improve social inclusion of young people

MEPs approve EU’s spending in 2017

Preparing medical students for new challenges in medical ethics

Security Council urged to help spare Syrians from ‘devastation’

A Sting Exclusive: “China-Africa Cooperation Sets a Fine Example of South-South Cooperation”, by China’s Ambassador to EU

EU steps up its strategy for connecting Europe and Asia

Can free trade deliver cheaper renewable energy? Ask Mexico

‘Rare but devastating’ tsunamis underscore need for better preparation, UN chief urges on World Day

Parliament backs a modernised EU electoral law

OECD Steel Committee concerned about excess capacity in steel sector

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s