Eurozone economic confidence is hardly a cause for cheer.
After all that the ECB has thrown at the economy, including near-zero rates and
a glut of liquidity, the recovery should have been doing a lot better by now.
The economy is still effectively flatlining. Critically, consumer sentiment is
still slipping. It is all down to a lack of real zeal and confidence. The weak
economic picture, high unemployment, and domestic credit contraction are all
taking their toll on economic confidence in the Eurozone. This could be
exacerbated in the coming months if any escalation in the contagion currently
sweeping emerging markets spills over into economic sentiment. Eurozone
recovery looks very tentative right now. It would not take too much of a dent
to consumer and business confidence to tip the Eurozone back into recession
again. The ECB cannot rest on its laurels, even with rates close to zero. The
odds are mounting that the ECB might have to decide to take official rates into
negative territory soon to jump-start sustainable recovery ahead.
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