Investing
No Recovery In Europe Means No Recovery Elsewhere
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The GDP of the Euro-zone is larger that that of the US and it is in just as much trouble. In the 16-nation alliance GDP dropped 4.6% last quarter. Germany’s GDP fell more than it has in decades.
The news is not just bad for Europe. Because of the size of its consumer and business spending pool, an economic catastrophe in the region means that exports from the US and China will remain crippled, which, in turn will undermine any GDP growth in the two large nations.
Whatever optimism experts had during the last several weeks that the economy is making a bottom is probably not accurate, especially when it comes to China. With US and EU growth running in reverse, the notion that China’s exports which are the pillars of its economy are due to improve soon cannot be true.
The EU news makes it much more likely that the real beginnings of a global GDP recovery is still several quarters away.
Douglas A. McIntyre
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