- Published on Tuesday, 28 February 2012 07:55
- Written by RTT News
Following the significant improvement seen in German business confidence last week, eyes will track euro area economic confidence to see whether the measures announced so far by euro zone officials are enough to restore confidence.
German business confidence climbed to seven-month high; IFO business climate index rose for the fourth straight month to 109.6 in February from 108.3 in January.
Euro zone economic confidence for the month of February is predicted to rise to 93.8 from 93.4 in January. Business climate indicator is set to show improvement to -0.15 from -0.21 a month earlier.
Last week, euro area finance ministers approved a 130 billion euro aid package, while euro area leaders may expand crisis firewall in an EU summit this week after G20 economies refused boosting the IMF resources.
Yesterday, the German Parliament managed to pass a Greek second bailout law after winning a majority of 496 versus 90 while 5 abstained. Merkel warned lawmakers that if Greece left the euro area this would endanger the region and lead to various negative economic repercussions.
However, Germany is under mounting pressure to combine both powers of the remaining 250 billion euros in the European Financial Stability Facility (EFSF) and the 500-billion-euro European Stability Mechanism (ESM), due in July, to have a total power of 750 billion euros; the thing which was opposed by Germany in more than occasion.
Regarding fundamentals, the 17-nation region recorded 0.3% contraction in the three months ended December from the prior three months, marking the first negative growth since the second quarter of 2009.
The previous week, the European Commission lowered its growth outlook for Europe as it expects a contraction of 0.3% for the euro area, down from the previously projected expansion of 0.5% in November.
Olli Rehn, European Union Economic and Monetary Commissioner, said the “euro area has entered into a mild recession” with the downside revision to growth Rehn explained that “prospects have worsened and risks to the growth outlook do remain, but there are signs of stabilization.”
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