- Oxford Economics
Economic growth in the Euro zone is likely to be steady but slow in the second quarter, underlying European Commission concerns that the currency area's recovery remains fragile and vulnerable to setbacks. Euro bloc's retail sales dropped for the first month in five during March Sales at European retailers dropped 0.5% on the month, compared with expectations of a more modest 0.1% decline, as consumers cut purchases of food, drinks and tobacco. Yet consumer spending was likely again a catalyst of growth in the first quarter of the year while European businesses faced weaker demand for their exports from China and other large developing economies. Separately, Markit's composite purchasing managers index, which provides a good steer on overall economic growth, fell to 53.0 in April from 53.1 in March. The services PMI remained at March's 14-month low of 53.1 in April, just shy of a preliminary 53.2 reading.
The Commission, meanwhile, said in its economic forecasts that Euro zone growth would be slower than previously estimated, with tepid inflation this year, and warned of high external and internal risks to the bloc's economy. Economists predict 0.4% growth in April-June as the region is still struggling with high debt, weak bank profits, high unemployment and still considerable excess capacity in the economy.
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