The economic slowdown in the euro zone is progressing. At 0.2 percent, growth in the euro zone in the second quarter of the current year was only half as high as in Q1 compared with the previous quarter. Not surprisingly, the domestic economy supported growth, while net exports were more likely to dampen growth. This is consistent with the general picture of a rather difficult international environment hampered by geopolitical economic risks and protectionist tendencies. Data from the euro area suggest slightly positive economic growth in Q2 in Germany.
The outlook for the economy in the euro zone is not promising. Almost all relevant leading indicators in the euro zone have fallen in recent months and point to a further slowdown in growth, with industry in particular suffering from weak world trade. However, a slowdown in growth momentum can also be observed in the domestic sectors in the meantime.
The ECB has reacted to the declining growth momentum and announced relatively clearly a further round of monetary easing. However, the ECB’s possible measures – ranging from further interest rate cuts to the launch of a new bond purchase programme – will hardly provide any sustainable growth impetus here. On the contrary, corporate investment should continue to weaken and excess liquidity in the euro economic system should continue to increase. The financial markets are likely to accept this gratefully, but in real economic terms it is unfortunately an insignificant development.