Eurozone returns to growth and other economics stories to read this week

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Joe Myers, Writer, Forum Agenda

• This weekly round-up brings you the latest stories from the world of economics and finance.
• Top economy stories: Eurozone returns to growth; Bank of England raises interest rates; New forecasts for the Indian economy.

1. Eurozone returns to growth, inflation cools

The Eurozone returned positive growth figures in the second quarter, with a higher-than-expected expansion in gross domestic product. GDP grew 0.3% – a Reuters poll of economists had predicted 0.2%.

France and Spain saw a sustained rate of growth, while Germany saw no growth. Italy suffered a mild contraction.

Eurozone inflation also fell more than expected in July, with consumer prices growing by 5.3% compared with 5.5% in June. While still a long way from the European Central Bank’s target of 2%, the data does point to an ongoing cooling in the bloc.

However, manufacturing activity across the Eurozone fell in July due to weaker global demand, reaching its lowest levels since the onset of COVID-19.

2. Bank of England raises interest rates

The Bank of England has increased its key interest rate by a quarter of a percentage. It takes the rate to a 15-year high of 5.25%.

The bank also warned that borrowing costs are likely to remain high. Its Monetary Policy Committee said it “will ensure that the Bank Rate is sufficiently restrictive for sufficiently long to return inflation to the 2% target”.

UK inflation remains high – the highest of all major economies, reports Reuters – standing at 7.9% in June. It had hit 11.1% last year.

3. News in brief: Stories on the economy from around the world

Australia’s central bank has held interest rates steady at 4.1% for the second month in a row.

Ukraine expects economic growth of around 5% next year, according to a senior official at the country’s economy ministry.

Job openings in the United States fell to their lowest in over two years in June. However, they remain at levels that are consistent with tight labour market conditions, reports Reuters.

Consumer price inflation in South Korea hit its slowest rate in more than two years in July. Inflation had been near a 24-year high of 6.3% a year ago, but official data shows it has now fallen to 2.3%.

Ratings agency Fitch has downgraded the US government’s top credit rating. US Treasury Secretary Janet Yellen described the move as “arbitrary and based on outdated data”.

India’s services sector expanded at its fastest pace in 13 years in July, a business survey has shown.

It comes as S&P Global forecasts that the Indian economy will grow by an average of 6.7% a year in the period to March 2031.

Inflation in Uruguay has fallen to its lowest level since 2005, with consumer prices rising 4.79% in July – down from 5.98% in June.

4. More on finance and the economy on Agenda

The European Commission has moved one step closer to a digital euro, with the unveiling of a framework for its introduction. Read our explainer on what to expect with a digital currency.

An innovative model for climate financing could help meet the increase in funding needed to protect nature and ecosystems. Here we explain how it works – and the impact it’s already had.

There is a gender pension gap in almost every country around the world. In this myth-buster, the authors look at some of the factors driving this divide – and some solutions.