The euro-zone recovery: With seasonally adjusted love

Posted: February 14, 2014 in economy
Tags: , ,

FOR Mario Draghi, president of the European Central Bank (ECB), today’s Valentine’s card from Eurostat’s numbercrunchers was covered with kisses—of the kind that central bankers and economists like to get anyway. The recovery, barely perceptible in the third quarter when output rose by just 0.1%, has steamed ahead (by euro-zone standards) to 0.3% in the last three months of 2013. That’s a little faster than the consensus forecast of 0.2% and the same as in the second quarter of 2013, when growth returned after a double-dip recession that lasted longer than the first plunge caused by the financial crisis.The pick-up in pace will be welcome at the ECB because the central bank is close to having exhausted its conventional resources in stimulating the economy, having lowered its key lending rate to just 0.25% in November. That’s a worry as inflation subsides, kindling concern that the euro zone may slip into Japanese-style deflation, which would exacerbate debt burdens, both private and public. A burgeoning recovery is the best antidote and would avoid the bank’s governing council having to resort to more radical and riskier forms of stimulus, such as introducing negative interest rates (on deposits made by banks at the ECB). The picture across the 18 countries that share the euro is not wholly sunny. Output continues to shrink in Cyprus, the fifth country that had to be …

via Economic Crisis http://ift.tt/1jEBWyf

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