The Eurozone Fighting Back
With every passing day the Eurozone is backed to be on the brink of a total collapse on the back of one negative statistic or opinion or another. Analysts take macabre delight in painting grim prognoses of European economies falling like dominos, Greece turning, or being unceremoniously slung, back to the Drachma, and a complete breakdown of the 17-country bloc.. And while the storm clouds have far from lifted, it is nice to have seen a smattering of positive news throughout the summer as well.
First was the positively viewed outcome of the Greek elections. New Democracy winning the elections in a very tight race with the Coalition of the Radical Left Syriza, and pledging commitment to the Eurozone and austerity was a gasp of fresh air for the bloc. Then a massive contribution to the IMF’s bailout fund was pledged by the BRICS leaders. The pledges for a $75 billion cash infusion were made after the leaders agreed that the situation in the Eurozone could have dramatic consequences for the global economy as a whole and should be avoided at all cost.
!m(/uploads/story/277/thumbs/pic1_inline.png)Other encouraging news came this week, reported in The Times. Eurostat data showed that there was increased demand for goods from the Eurozone in June. The trade surplus with the rest of the world came in at €14.9 billion, whereas it was at €200 million the same month a year earlier. That’s the highest level since 1999, when records began. The main reason for the dramatic rise was a 2.4 percent monthly increase in exports, while imports remained stable.
In Q1 of the year exports to Russia saw the biggest increase- 16 percent compared to the same period last year. Japan and Switzerland were a close second and third.
The strong demand for European goods is essential for maintaining healthy levels of trade and exports in Europe. According to Anatoli Annenkov, an economist at Société Générale, it was because such demand existed, that it was possible to continue offsetting the continued weakness in southern Europe.
However, Mr. Annenkov warned that the positive trend is not without danger of a reversal in fortunes, considering the continuing debt crisis and the fact that global growth is slowing down.
The European Union’s (including countries outside of the Eurozone) trade surplus was at €400 million, which is also a positive development, considering the €15.3 billion deficit from a year ago. Germany recorded the largest surplus, with the Netherlands and Ireland second and third. On the losing side was the UK, registering the biggest deficit. France and Spain completed the top 3.
Speaking of Spain, the Bank of Spain announced on Friday, 17, that bad debt held by Spanish banks rose to a record 9.42 per cent of their outstanding portfolios in June. So, the crisis is still a long way from over, especially in southern Europe, where the economies and the banking systems have been severely compromised. But it is nice to for once dwell on the positives. At the very least, Eurozone manufactures have something to be happy about. The world hasn’t lost its faith in the European goods.
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