The data out of the eurozone this morning were below expectations. Growth in Q1 was up just 0.2% versus an anticipated 0.4% pickup. Much of this growth came from Germany, as many countries in the eurozone saw no growth or contraction. This is the final piece of data that will give the ECB a license to ease – and ease aggressively.
Yesterday, I outlined the ECB’s options, noting that in Q1 “the industrial production number is another figure showing sluggish growth at best.” The point here was that growth's undershooting means inflation undershooting as well. And with the eurozone still at stall speed, any exogenous shock could tip the eurozone back into recession. And in that case outright deflation, and a resumption of debt deflation would be all but inevitable. The ECB recognizes this an...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.