Politics

Omicron dampens hopes for euro zone’s economic rebound


Inflation unexpectedly hit 5 percent last month, a record high for the 19-country currency bloc as supply-chain bottlenecks curtailed the availability of consumer products.

ECB is unlikely to revisit its policy stance until March, especially as Omicron clouds the outlook.
ECB is unlikely to revisit its policy stance until March, especially as Omicron clouds the outlook.
(Reuters)

Euro zone economic sentiment has dropped more than expected last month while inflation hit
another record high.

This indicates that the region’s economy is under renewed
stress as surging coronavirus infections force governments to
tighten restrictions.

Foreshadowing the pain, the European Commission’s Economic Sentiment Indicator, a key gauge of the bloc’s economic health, fell more sharply than forecast in December to a level last seen in May. 

With infections breaking records almost daily as the Omicron
variant sweeps across Europe, growth is likely to take a hit
around the turn of the year even though governments have largely
avoided the debilitating measures that brought their economies
to a standstill a year ago.

The outlook for services worsened significantly and
employment expectations also fell.

READ MORE: OECD: Omicron threatens global economic recovery

Germany’s slowdown evident

In Germany, the euro zone’s biggest economy, supply chain bottlenecks have held back the vast factory sector for most of the last quarter and industry, thought to be on the rebound, unexpectedly stumbled in November.

Output fell 0.2 percent on the month, despite expectations for a 1 percent rise, reinforcing views that Europe’s biggest economy came to a
halt in the fourth quarter of 2021, with no relief in sight for
months.

In a rare bright spot for the bloc, retail trade
unexpectedly rose in November, indicating that at least
consumers remained optimistic going into the Christmas shopping
season.

The problem is that heavy spending by households, who were
forced to save up cash for the past year amid restrictions, is
pushing consumer prices to new records.

READ MORE:
OECD: ‘A global economic recovery is in sight’

READ MORE:
No recovery in global jobs market forecast until 2023 due to Covid

Source: TRTWorld and agencies



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