Europe Reports Slower Growth then Expected

SA Business News

July 24, 2008

By Staff Writer, Marc Stein

Yesterday, the European Central Bank announced that its expectations of growth were diminished further by reports from France, Italy and Germany of a slowing economy. Andrea Merkel, Chancellor of Germany declared that the German growth was slower then it has been in the past six years.

Both Merkel and the ECB have indicated that energy costs have contributed to the downturn intensification in the countries economies. The results now indicate the danger for the entire Eurozone economy at an aggressive rate due to the overzealous inflation rate.

The Ifo Institute (University of Munich Research Center for Economics) in Germany said its business climate index had tumbled from 101.2 in June to 97.5 this month, which is the lowest in three years. The sub-index covering expectations for the next six months, at 90.0, are the weakest since November 2002. Ifos statement concluded, These results suggest that the economic upswing is coming to an end.

French business confidence dropped to the lowest for more than three years, according to Insee, the statistical institute.

The IASE, International Association for Statistical Education, reported Italian business confidence was the weakest since October 2001. Meanwhile in Spain, unemployment rose in the second quarter to the highest level in three years.

According to a Goldman Sach's Executive Dirk Schumacher, with the exception of Spain, the large 15 country Eurozone has not faced the pain of the economy as in the United States.

Opinions differ as to what the numbers will show in the fourth quarter.