By Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman
The euro area provided its first estimate of Q1 overnight and it was another disappointment. The 0.2% decline in GDP comes after a 0.6% contraction in Q4 and confirms the euro area as the weakest among the high income regions. It is the sixth consecutive quarterly contraction, a record of dubious distinction.
This Great Graphic was posted on lemasabachthani blog. The first chart shows how the PMI does a fairly good job tracking the region’s GDP. The April PMI readings indicate Q2 is off to a soft start.
The second chart shows the changes in the overall levels of GDP, index to 2005 (=100). That German GDP has surpassed its pre-cycle peak seems well appreciated. The magnitude of Italy’s under-performance may be somewhat surprising, though its weakness is understood.
With such high (recorded) unemployment, one might have expected a worse performance by Spain, though it has begun more clearly under-performing. Perhaps most remarkable is how average (EMU level) France’s performance has been.