Despite the strong growth shown by Europe’s largest economy, Germany, in the third quarter, other countries in the euro zone lagged behind, reports Reuters.
According to studies released on Friday, the continent’s second- and third-leading economies, France and Italy, shrank in growth for the same period. The newswire speculates that this contraction presupposes “stagnation or worse.”
High unemployment and “years of austerity” might be contributing to the sluggish business growth and consumer confidence in the euro zone.
The data, which Reuters notes “[are] likely to disappoint policymakers yet again” come on the heels of the European Central Bank’s Mario Draghi announcing plans to acquire securitized debt as a way of reviving lending and increasing demand. Dragi did not disclose the target size of the program, which will run for two years.
Draghi also kept mum about a quantitative easing program that entails buying sovereign debt. The lack of news, says Reuters, disappointed markets that hoped the ECB would do more.
Markit’s latest purchasing managers index, which surveys thousands of companies across the euro zone, plummeted to a ten-month low of 52.0 in September. This is slightly below August’s 52.5.
However, according to Reuters, it was “the 15th month that the index has remained above the 50 line that denotes growth.”
If the weak growth continues, lawmakers in the euro zone might explore other options to rev up the economy.
Chris Williams, Markit’s chief economist, tells Reuters: “The waning of growth signaled by the PMI will apply further pressure on the ECB to broaden the scope of its purchases, to not only buy riskier asset-backed securities but to also start purchasing government debt.”
Source: Reuters: Faltering demand weighs on euro zone business growth in September
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