The outlook for the euro zone economy is improving a little taking into account the recent evolution of the Conference Board (CB) leading economic index. That index was up in November (0.6 percent) and December (0.8 percent), after having almost stagnated in September (-0.2 percent) and October (0.2 percent) according to data published January 27. From June to December, the index showed an increase of 3.0 percent, compared to 3.2 percent in the six preceding months. Then, the pronostic is one of a stable pace of growth or moderate growth in the coming months.
Moreover, the European Commission released January 27 the most recent results for its Economic Sentiment Index, one of the components of the CB leading economic index for the euro zone. The ESI is stable in January when compared to December, but in the last months it remained neatly above the average long term trend, notably because the confidence in the industrial sector continued to improve. Consumer confidence has lately followed the average long term trend.
In the January 25 update of its World Economic Outlook, the IMF forecasts a GDP growth of 1.5 percent in the euro area in 2011, with 2.2 percent in Germany, 1.6 percent in France, 1.0 percent in Italy and 0.6 percent in Spain.
Inflation in the euro zone and the financing of the huge public debt in many countries are still major concerns, and they tend to push interest rates upward at a time where other economic fundamentals would not justify such a trend.
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