Paul Nguyen
Wall Street Journal in-depth recent Eurozone economic activities summary
Eurozone Manufacturing Activity Picks Up
The article talks about the reason rise in manufacturers located in the Eurozone. As we know, the Euro zone has been going in and out of recessions after the initial one in 2008, and as recent as the past couple of months, the Euro started to weaken at a fast pace. While a weaker Euro does help to improve sales to over sea buyers (better conversion rate than before), it also raises cost for companies in the Eurozone. The article also predicted that because of these problems, the European Central Bank will have a hard time raising inflation rate back up to its targeted 2% rate (a stable rate that helps growth). However the growth promoted from international order is predicted to boost confidence of manufacturers, which could mean they may start hiring workers again and that will decrease Europe’s record high unemployment at 11.3%. This is an effect that can be linked to the recent ECB’s program of buying public assets (government bonds and debts) in an effort to pump money into the economy and raise inflation, while weakening the Euro at a more rapid pace than expected.
ECB Starts Buying Public-Sector Assets
One of the ECB recent program, called the “Public Sector Purchase Programme” is one that is much like the Feds response to a recession, and one that the ECB hope will turn the tide economically in Europe’s favor. Under this program, the ECB is expected to try and pump more than €1 trillion ($1.09 trillion) into the Eurozone economy. In January, the ECB decided to start buying €60 billion per month in mostly government bonds between March this year and September of next year, and that in result would bring inflation rate back up from a -0.3% (sign of stagnation) to the target inflation rate of just under 2% and signal a boost in economy (Both a goal of a central bank system – growth and stable inflation).