IMF downgraded its projections for the Euro Area. Economists predict that the EU will get back to the pre-pandemic levels only by the end of 2022.
German economy demonstrates improved momentum in the second quarter
In the second quarter, the German economy managed to regain some of its lost momentum, underpinned by manufacturing, private consumption as well as reviving exports. That’s what the Bundesbank told in a monthly economic statement on Monday.
For the first three months of 2018 economic surge suddenly halved to a quarterly rate of about 0.3% and financial analysts are still discussing whether the deceleration turned out to be merely a hiccup or it stood for the end of a boom in the EU’s number one economy.
Worries that worsening trade tensions could also impact surge have also been affecting investor sentiment. Additionally, the International Monetary Fund told that the euro zone was experiencing serious risks, which could provoke a hand landing for the German economy after a five-year rally.
As some financial analysts pointed out, the German economy demonstrated better momentum in the spring in contrast with the beginning of the year. However, it’s unlikely that the high surge rates of the previous year are going to be repeated. Once again manufacturing turned out to be the major economic driving force.
Pharmaceutical output happened to be especially firm. In addition to this, car manufacturing rallied steeply, even as the output of intermediate goods was still poor, as the bank informed.
Part of the improvement in surge momentum could be explained by the expiration of one-off factors, which held back surge, such as an extremely disruptive flu season. That’s what the Bundesbank informed.
As for household consumption, it managed to remain a cornerstone of surge. At the same time, government consumption that went down in the early part of 2018, bounced off too.
Besides this, activity in the flourishing construction sector managed to drastically ascend notwithstanding capacity constraints, as the Bundesbank pointed out.
The market sentiment deteriorated amid increasing virus cases in the USA and Australia. Investors prefer safe-haven assets like gold, the US dollar and the Japanese yen.
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