Economic confidence in the euro area declined more than economists forecast in May to the lowest in 2 1/2 years after inconclusive elections in Greece raised the specter of a euro breakup.
An index of executive and consumer sentiment in the 17- nation euro area fell to 90.6 from a revised 92.9 in April, the European Commission in Brussels said today. That’s the lowest since October 2009 and below the 91.9 forecast by economists, according to the median of 28 estimates in a Bloomberg survey.
Europe’s economic slump shows signs of deepening after Greece failed to form a government following May 6 elections while Spain struggles to clean up its banks. Citigroup Inc. economists forecast that Greece could leave the euro area by next year. Euro-zone manufacturing and services output contracted more than economists estimated in May and German business sentiment had the steepest decline since August.
“New elections in Greece and the Spanish banking crisis are fueling uncertainty among consumers and companies,” said Heinrich Bayer, an economist at Deutsche Postbank AG (DPB) in Bonn. “The euro-region economy will have a weak second quarter, or stagnation with adownward risk. We still see a moderate recovery in the second half unless the crisis worsens further.”
The euro extended its decline against the dollar after the data, trading at $1.2438 at 10:02 a.m. in London, down 0.5 percent on the day.
More at : http://www.bloomberg.com/news/2012-05-30/euro-area-economic-confidence-declines-more-than-forecast-1-.html
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