According to the economists’ evaluation, Eurozone GDP will show insignificant growth next few months, despite the slowdown in production, deterioration of credit terms and market volatility which may cause new stagnation period.
At 4Q of 2015 Eurozone economy increased by 0,3%. Germany GDP also rose by 0,3%. There is stagnation in Italy (0%) while Greece is again in recession. Credit Suisse warns that growing populism, protectionism and nationalistic riots can destroy the currency coalition.
At the moment the risks are growing in Europe: Britain leaving the EU, the Schengen zone falldown. The Euro showed the second worst dynamic among the majors lowering to the 4-week minimum. According to Morgan Stanley, future of the European currency is in question. The bank could downgrade its forecast. The euro’s value can be only 96 cents which is the lowest level since 2002.
The weak euro should help the coalition’s exporters. But according to GDP data, this is not happening. Besides, the inflation showed negative figures again in February. The Europe is trapped with slow price rising and economy development, Credit Suisse specialists think.
The main reason for European stock indices decrease is the cheap bank shares. During the trades Deutsche Bank shares lost 20-30%. Despite of all the efforts taken by the ECB, the commercial banks are not willing to finance business on such terms. Credit Suisse considers that further reduction in deposit rate can cause more harm than good that is why it is necessary to find new stimulus mechanisms.
