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Euro zone GDP seen slowing in 2016

Thursday, February 04, 2016 - 01:42

Euro zone economic growth will slightly accelerate this year and next, the European Commission estimated on Thursday, but the pace will be slower in 2016 than previously forecast because of increased global risks. David Pollard reports.

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Picture-postcard Greece ... But for investors, a vision of an economy at a standstill. Ships without crews, stations empty of commuters ... Many here - in Athens for a general strike. Amid fury over government plans to slash salaries and reform pensions as part of its bailout. (SOUNDBITE) (Greek) PROTESTER, NIKOLAOS GINIS, SAYING: "With 40 years of work, I get a pension of 740 euros per month. The government should be hanged." The good news - relatively: Greece's economy will shrink by 0.7 per cent this year. The latest European Commission forecast is a revision upwards of the previous prediction. The strike, though, coincides with a major review of Greece's bailout performance. Greece the only euro zone economy expected to contract in 2016. CIBC's Jeremy Stretch. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Greece has predominantly dropped off the radar in the current environment ... and I think it is just an issue that will bubble along in the background, but it is always one that is susceptible to blow up again into another scenario which will cause market concern and frustration." The euro zone as a whole is seen growing 1.7 per cent this year. That's a revision downwards - because of China and other global risks. There's an even sharper downgrade to inflation - a headline half a per cent rate seen now, compared to one per cent previously. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "We are seeing inflation expectations moving substantially away from the ECB's target ... The ECB's policy remit is still all about that inflation target, that's the reason why they will continue to push towards additional stimulus at that March meeting." But one piece of good news for the ECB comes from Germany. Wage inflation there confirmed at 2.5 per cent last year - the strongest rate since 1992.

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Euro zone GDP seen slowing in 2016

Thursday, February 04, 2016 - 01:42