Draghi Fantasizes about a Eurozone Recovery

Euro zone set for recovery in second-half of 2013: Draghi | Reuters.

One of the reason that the Eurocrisis continues to worsen is that politicians are basing their crisis fighting on unrealistically strong economic growth in the near future.

Spain and Greece continue to collapse at a faster rate than official projections, Italy is in a recession, and France and the U.K. are basically stagnant over the last year or so. Germany has managed slow growth, which is better than nothing.

The whole EU has been in a recession for 2012, but these facts do not stop Mario Draghi from proclaiming that the EU will begin growing in the second half of 2013.

Growth can only come from increased demand. While an export boom driven by the growth in the rest of the world will help, Europe does most of its trading with itself, so it desperately needs the revival of internal demand.

This revival requires that Europe take some chances to solve the Eurocrisis, which is not happening before German elections. Watch for the EU to remain in recession for the rest of 2013 with budget deficits worsening across the entire continent.

dareconomics.wordpress.com

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s