Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Eurozone economy rebounds as inflation slows

Home National Eurozone economy rebounds as inflation slows
Eurozone economy rebounds as inflation slows

BRUSSELS – Economic growth in the eurozone rebounded in the second quarter, data showed yesterday, but concerns remain over inflation that is slowing yet still stubbornly high, and over stagnation in the German economy.

The EU’s Eurostat data agency said growth in the 20-country single currency zone reached 0.3% over the April-June period after recording zero growth in the first three months of the year.

The first-quarter figure was revised from a decline of 0.1% that had signalled a technical recession.

The figures came after data last week showed that Germany’s gross domestic product (GDP) stagnated between April and June, though the French and Spanish economies grew more than expected.

The European Central Bank (ECB) has hiked interest rates to their highest level since May 2001 to tame red-hot inflation, though its president Christine Lagarde last week indicated that the aggressive rate-hiking campaign could be paused.

Analysts suggest that another hike is still a possibility, and could further constrain economic growth.

“With monetary tightening still expected to have its most dampening effect on growth later, continued broad stagnation of economic activity remains the most likely outcome for the coming quarters,” said Bert Colijn, senior eurozone economist at ING.

Colijn said the eurozone GDP reading would not be “a dovish argument” at the next ECB rate-setting meeting in September, “leaving a further hike on the table”.

While the eurozone registered a slight drop in overall inflation this month, to 5.3% from 5.5% in June, in line with analyst expectations, core inflation – which strips out more volatile elements – was unchanged at 5.5%.

Both figures remain far higher than the ECB’s 2% target, though Lagarde said before the data release that “we are reaching our goal”.

“By all accounts, monetary policy has started to have an effect for lowering inflation,” she told French daily Le Figaro in an interview published late Sunday.

Also, food and drink costs are still rising sharply, at 10.8% compared with 11.6% in June, hitting European consumers’ wallets.

Energy prices, however, dipped further, falling by 6.1% in July on the back of a drop of 5.6% in June.

The core inflation rate, which excludes fast-changing energy, food, alcohol and tobacco prices, is the key indicator for the Frankfurt-based ECB.

Among the 20 countries that use the euro, Belgium had the lowest inflation rate, at 1.6% in July, Eurostat said.

There will be further concerns over the health of Germany’s economy as inflation remains high, reaching 6.5% in July, Eurostat said, down slightly from 6.8% in June. – Nampa/AFP