FXS: Euro zone GDP first quarter unrevised at 0.2%
The euro zone GDP first quarter was unrevised as the recovery in the region is undermined from the harsh winter that hit nations alongside the swelled deficit which is choking growth levels, yet the higher exports and government spending have aided economic growth.
GDP first quarter preliminary reading stood unrevised at 0.2% inline with estimates while on an annualized basis, was revised upwards to 0.6% from 0.5%.
Exports, which were a main aid to growth, on the quarter rallied 2.5% from the prior quarter of 1.7%. Exports increased as a result of the euro declining 15% versus the dollar from the start of this year, therefore encouraging overseas traders to import from euro zone as goods and services became cheaper to them.
The euro was heavily brutally beat from the debt crisis spreading throughout the euro zone, which caused governments to adopt austerity measures as a way to tame the deficit and end the crisis before it continues to spread, and this resulted in negative pessimism in markets and hurt the outlook of the euro.
The improvement in the nation was witnessed from the increased demand from Asian economies, as they are leading the global recovery. Although exports are boosting growth levels, yet the widened budget deficit is sabotaging the outlook of the euro zone.
Another factor is that holding back growth levels is that domestic demand remains curtailed from the 12-year high unemployment rates standing at 10.1%. Household consumption on the quarter, declined to -0.1% from the revised advance reading of 0.2% from 0.0% and worse than the projected -0.1%.
Demand levels remain impaired from the fiscal position of economies, which is the EU and IMF unleashed a package worth nearly $1 trillion to aid those economies seeking help to contain the deficit. Greece, Spain and Italy have already applied measures to reduce spending and increase savings, as a way to restore some of the long lost confidence.
The EU Commission projected the euro zone to expand 0.9% this year and 1.5% next year, raising estimates from the prior projections as a result of the exports aiding the nation.
The central bank projects this year that the nation will expand 0.8% while the upcoming forecasts are to be released next week, while the bank is mostly likely to leave interest rates steady at 1% for the rest of the year under growth has revived.
