Tuesday, October 13, 2015

Eurozone: Recovery intact despite weak august data – Wells Fargo

FXStreet (Córdoba) - According to analysts from Wells Fargo, last week economic data from the Eurozone was disappointing, affected possibly by the slowdown in the developing world, but other indicators still show the economy recovering.

Key Quotes:

“What is going on with IP (Industrial Production) in the Eurozone? Some of the recent weakness in the industrial sector may reflect the slowdown that is underway in the developing world. After all, developing economies account for nearly 30 percent of Eurozone exports.”

“Is the downshift in economic growth in the developing world enough to bring the Eurozone economy to its knees? Probably not. As we showed in a recent report, final spending in developing economies accounts for only 7 percent of value added in the euro area. Services account for the bulk of value added in the euro area, and the service sector is not nearly as exposed to spending in foreign economies as is the industrial sector.”

“In that regard, the service sector PMI in the Eurozone remains well above the demarcation line separating expansion from contraction.”

“In sum, we believe that the economic recovery in the Eurozone, which has been in place since early 2013, will remain intact for the foreseeable future.”
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