Eurozone economy: the slow-motion train wreck2 May, 2012, 17:19. Posted by Zarathustra
Tags: Euro Crisis
So the whole of Europe is pretty much in a recession, or will be in one if they are not already in. If some of the countries are not yet in a recession, they will most certainly be in one soon.
In hope to tackle its debt, with austerity being the answer, it is not at all unexpected that the economy, particularly in the periphery of Europe, will have to suffer, which will in no way help to tackle the debt problem.
At the same time, if some member stats in the Eurozone tighten their fiscal policy, it also be clear that it has a negative impact on the other side of the monetary union.
So here we are, with the final Eurozone manufacturing PMI compiled by Markit hits a 34-month low at 45.9.
Even strong ones like Germany is slipping deeper into contractionary territory, with PMI deteriorated further to 46.2.
Charts below are from Markit:
Meanwhile, Eurozone unemployment hits new high since the Euro began. Eurozone unemployment hits 10.9% in March.
The euro area (EA17) seasonally-adjusted unemployment rate was 10.9% in March 2012, compared with 10.8% in February. It was 9.9% in March 2011. The EU27 unemployment rate was 10.2% in March 2012, stable compared with February. It was 9.4% in March 2011.
Again, I don’t wish to impose any value judgment in saying that austerity is wrong and they should just spend more and borrow more. This is just pointing out the economic consequence of austerity, and that is a contraction.