Weakening Germany & France

Expectations continue to decline for core eurozone countries, while the Federal Reserve does everything it can to boost the US economy

Dave Sekera, CFA 18 December, 2012 | 10:06AM

Eurozone Recession Spreads to Core Countries from Peripheral

The European Central Bank (ECB) recently lowered its economic forecast for the eurozone's 2013 gross domestic product (GDP) to a 0.3% contraction compared with the 0.5% growth estimate it forecast in September. The decrease was largely due to recent weakening in Germany and France, which together account for about half of the eurozone GDP.

Germany, which has long been the pillar of strength, recently lowered its 2012 GDP growth forecast to 0.7% from 1.0%, as GDP is expected to contract 0.3% in the fourth quarter. The country also lowered its 2013 forecast to 0.4% from its June estimate of 1.6% based on its assessment that GDP may also contract in the first quarter of 2013.

The ECB held its benchmark refinancing rate steady at 0.75% at its December meeting, but as the recession in the eurozone expands, we would not be surprised to see the ECB cut short-term rates.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Dave Sekera, CFA  is a senior securities analyst with Morningstar.

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies