Sound bites: Eurozone economic confidence showing a brave face. Or is it?

The March Eurozone economic sentiment index jumped to 102.4 from 101.4 in the prior month. Superficially, it looks like it is all speed ahead for economic confidence in the Eurozone. Or is it? So far, the Eurozone sentiment index is brushing off the negative impact of the Ukraine crisis, that is already starting to show up in the German data. Recent German IFO, ZEW and PMI surveys have already alluded to a dip in sentiment thanks to the escalation of risks emerging from the Ukraine. It is all a question of how long before the crisis starts to cast deeper shadows across the whole of the Eurozone. Economic optimism has been in a strong positive uptrend since the 2011-12 recession. If economic confidence starts to crumple this could have serious consequences for consumer and business spending and investment plans ahead, putting the recovery at risk. This will make monetary stimulus efforts doubly difficult for the ECB. The odds are very strong still that next week’s ECB meeting will have to debut ‘alternative measures’ to rejuvenate stronger growth prospects. The Eurozone recovery outside Germany is still flagging badly. It will either mean a dip into negative interest rates, a shift to full-blow quantitative easing, or stronger attempts to weaken the strong euro. It might even see a three-pronged attack encompassing all three policies.