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Euro zone economy still out of tune?

Friday, May 22, 2015 - 02:16

German foreign trade weakens, the IFO slips and Italy's industrial orders contract. David Pollard reports on the latest round of data from a euro zone economy still struggling to find full voice.

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Sixty years old but hardly a wrinkle in sight. The Eurovision song contest goes through its paces before a special anniversary final on Saturday. A celebration of partnership across a European continent. And if its biggest economy could be missing the beat, that shouldn't spoil the mood. Says Charles Stanley chief economist, Jeremy Batstone-Carr. (SOUNDBITE) (ENGLISH) CHIEF ECONOMIST AND DIRECTOR AT CHARLES STANLEY, JEREMY BATSTONE-CARR SAYING: ''The German economy has flourished .... It feels a little bit more like the pause that refreshes for Germany rather than something to be more concerned about.'' But there are buts. As a recently stronger euro takes the edge off Germany's export prowess, latest numbers show its GDP rising less than France on the quarter. Strong domestic demand dragged down by weak foreign trade. German business morale deteriorated in May - if slightly - for the first time in seven months. Italy's latest numbers show industrial orders fell in March, after a strong rise the month before. And as for the global context: it's a worry. (SOUNDBITE) (ENGLISH) CHIEF ECONOMIST AND DIRECTOR AT CHARLES STANLEY, JEREMY BATSTONE-CARR SAYING: ''The US economy is also very depressed, China seems to be performing more slowly than the headline data would have one believe. The global picture is concerning, and therefore I have to say that the improvement in the euro zone is going to be fairly slow-paced.'' Is Mario Draghi right then to warn more needs to be done? The ECB chief told a conference in Portugal that debt, unemployment and reform are still key issues. Monetary policy is working its way through the economy, he says. Though for many ECB watchers the jury's still out on just how effective QE can be. (SOUNDBITE) (ENGLISH) CHIEF ECONOMIST AND DIRECTOR AT CHARLES STANLEY, JEREMY BATSTONE-CARR SAYING: ''To describe QE as the basis for economic revival and recovery would be missing the point, and indeed, after 23 trillion dollars worth of QE equivalent, in a number of geographies, globally economic growth still continues to struggle to gain traction.'' But new signs of dovishness at the ECB and the Fed have leading European shares poised for their biggest gain in six weeks, Germany's Dax heading for its best week since January. The easy monetary stimulus of QE still proving a number one hit for some.

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Euro zone economy still out of tune?

Friday, May 22, 2015 - 02:16