Euro-zone Picking Up: Signs of Recovery in Q2
Euro-zone Picking Up: Signs of Recovery in Q2
Much like green shoots emerging once the seed is planted, Euro-zone industrial output has rebounded with double the expected monthly rise in April. This is due to the energy and non-durable goods production. An acceleration of economic growth is in place.
Production output in the 18 countries sharing the euro rose 0.8% in April after the downward revised -0.4 percent drop in March. Economists had expected a 0.4% rise and ended up with double the amount. Compared to last year, production grew stronger than expected 1.4% against an upwardly revised 0.2% rise in March, reported previously as a0.1% drop. Annual growth of 0.9% had been expected.
It is a good rebound indicating growth acceleration in the second quarter. This data shows a strong euro zone retail sales numbers and a rebound in industrial orders for Germany in the month of April. The second quarter is showing all the winning signs. The monthly production rise is the strongest in 5 months as it is mainly driven by 2.5% rise in energy output. This has been followed by an increase of 2.1 percent in the non-durable consumer goods output.
Production of capital goods is the only sector with a monthly decline and drop of 0.1%. Industrial production in Portugal has also picked up with strong investor preferences for bonds. This led to a record 6.7% increase in the month of April. Spain experienced a monthly production rise at a pace that outpaced August 2012's. Ireland's industry has recorded its stronger yearly increase since November 2010 as per the Eurostat.
Finland and Malta were the only 2 euro zone countries that had production falling in the month of April. Both France and Italy experienced healthy growth. France, the bloc's second largest economy returned to monthly expansion in April. Italy which is the third largest economy is also on the road to recovery.
In Germany, the euro zone's growth engine has edged up by less than 0.2% on the month as the spring rebound was less due to to a mild winter. The situation outside the Euro zone also looks to be picking up. Britain experienced its strongest annual growth over 3 years in April showing the country's economic expansion is less reliant on consumer demand. Recovery was also broadening as a result of this.
The 9.5 trillion euro zone economy had displayed weaker than expected growth at the start of the year. With strong growth in Germany not being enough to offset the contractions in Netherlands, Italy and France, the fate of EU in terms of growth literally hung in balance for sometime. Of course, with right wing and independent parties staging a French revolution recently, there is a question of where the EU is headed. But if the EU elections were a battle between the “nationalist and the globalist” one wonders what is the need to divide the two.
National and global interests can run side by side if peace, prosperity and growth are targeted by both. Unfortunately, this does not always happen. Rose colored lenses are needed to survive in a world beset with contradictions that are tragic-comic. The ultimate joke is mankind's ignorance in this divine comedy. But it can lead to tragic results that are irreversible. Growth coupled with sustainability is needed if such tragic results have to be battled with confidence. Only then, true growth is possible.
