This morning there was the release of Q3 GDP data from countries of the eurozone. While there was some relief in the market to see that overall the GDP of the eurozone grew 0.2% in Q3, the data released shows still major weakness among the major economies of the eurozone. The positive note (relatively positive) was Germany, which saw its economy expand a “whopping” 0.1% thus avoiding (or postponing) a triple-dip recession. On the other hand Italy and France showed a negative print with -0.1% and -0.2% respectively.
Probable reaction of Angela Merkel to the news
However, given the recent performance of the eurozone there is little to celebrate. In my posts last year I criticized the ECB for its inaction and for waiting too long before doing something about the worsening of the situation. Even if the current measures adopted are not likely to revive these zombie economies, these are at least sending some sort of signals to the market that the ECB is trying (or pretending) to spur growth. The major issue now is the inability of the eurozone countries to reform themselves, every country thinks about itself, often asking the neighbor for more sacrifices. There is no planning, and no coordination among themselves. These economies are entangled into a very dense net of bureaucracy, silly rules and blocked by a wall of austerity. In these conditions it’s very hard to grow. But if that was not enough, there is also the uncertainty created by the situation in Ukraine and the sanctions against Russia (which I want to remind is one of the major destination for european exports and the supplier of our energy). What is truly dismal is that all these sanctions were applied following the twisted reality pictured by western-media (these stories are not backed by any proofs). And it’s no coincidence that the decline of the eurozone economies accellerated after the imposition of sanctions against Russia. In my opinion no stimulus or reforms can heal this situation. To truly grow, Europe needs to fix its relations with Russia.
But for now Germany is not yet in recession, so there is still time for some celebrations and more sactions.
Written by Gianluca Fontana
