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Euro zone growth outstrips U.S. in Q1

Wednesday, May 03, 2017 - 01:52

The euro zone economy has started the year with robust growth that the United States and set the stage for a strong 2017. As David Pollard report, the preliminary estimates may weaken the eurosceptic parties that have gained ground in EU states - but could also raise further questions over whether the ECB's asset-purchase programme is appropriate.

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It's been a slow rebuild. Finally the work appears to be paying off. The euro zone now projected to grow at a pacier 1.8 per cent this year - outperforming the US. On the day those figures were released, joblessness in Germany was seen to fall even further. Europe's heavy hitter with record low unemployment. SOUNDBITE (English) JAMES HUGHES, CHIEF MARKET ANALYST, GKFX, SAYING: "From Germany's point of view, the numbers have been particularly good .. We've seen a lot of the PMI numbers come in particularly strong, the unemployment is strong. It's not feeling the hit of CPI inflation as hard as lot of the other countries have been, and the growth continues to be good." But inflation across the euro zone is now at the ECB target rate of just below two per cent. Raising questions for the central bank's chief, Mario Draghi. On whether he should ease back on the very measures many credit with restoring the economy. (SOUNDBITE) (English) GERMAN FINANCE MINISTER, WOLFGANG SCHAEUBLE, SAYING: "Ultra-loose monetary policy in many regions is unhelpful....In fact, it might even raise the risk of yet another crisis." Though the crisis most fear right now could be political. In April, the ECB actually bought more French and Italian bonds than its own asset purchase guidelines allow. A move, possibly, to calm markets before the first round of France's presidential vote. SOUNDBITE (English) JAMES HUGHES, CHIEF MARKET ANALYST, GKFX, SAYING: "The rest of Europe still needs that QE, it still needs that to be pumped into the economy. And this is the fine balancing line that you have, when you have one economy that is so much stronger, so much bigger, than all of the others." Better growth numbers may weaken the hand of eurosceptic parties in France and elsewhere. But for critics of QE, the data leaves an even narrower line for Draghi to tread - when he delivers the next ECB policy decision in June.

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Euro zone growth outstrips U.S. in Q1

Wednesday, May 03, 2017 - 01:52