The strongest industrial data to come out of Europe in years has appeared and the boost to the economic prospect for the continent has surged with newfound hope. Analyst was on the money with their prediction of growth for the second quarter but was surprised by just how much growth there was. The demand for German exports increased and brought the 16 nation Euro-zone to healthy 3.9% growth during that second quarter.
ECB President Jean-Claude Trichet said he thinks the third and 4th quarters may prove “significantly less dynamic” and he went on to concede that the numbers coming in for the early third quarter were after all very promising. If the Ifo surveys are any indicator of the real state of economics in the German market then optimism is indeed in order. An Economist at ABN AMRO, Nick Kounis made this observation” the sovereign debt crisis is not entirely over. Also we see a slow down in the global Industry. Domestic demand in Europe remains weak, with consumer spending slowing down.” These dire predictions may have some folks feeling a little cautious about the Euro-zones stability but the figures belie the predictions.
Even with the recent economic woes of two of the countries in the bloc it is no indication that investing in this sector is going to fail. The positive data should have calmed the restlessness of investors but most remain cautious even if they are somewhat optimistic. ING’s Chris Turner was quoted as saying” while the treat of a peripheral (European Union) debt crisis has receded we would still prefer to hold Swiss francs over Euro’s”. This sentiment will be slow to change as the debt crisis in several countries within the bloc countries.
To its credit the weakened Euro has encouraged the boom in German Exports as the rest of the Nations seek out less expensive Luxury cars and other goods of that nature. The news out of Asia is promising as it has reports that the Asian Central Bank is selling dollar currency for Euro’s. It is being said that the Asian banks are getting weary of their reliance on the US dollar and are actively seeking a new vehicle. The doubt has increased with the American debt still soaring and the recovery efforts for the ailing American economy showing little progress. A lot is riding on the soon to be released figures of the institute for supply management. This will say more about the future of the Euro, than all of the upheaval in the various countries will ever say. Although the GDP’s of Spain and Greece can have a significant effect on the entire Euro-zone.