European Recovery Needs 5 Things to Happen

The European Central Bank’s plan to rescue Europe’s economy won’t work on its own. Its success hinges on whether people, governments and companies do what’s needed: Spend, hire, borrow, invest, export, expand.

ECB chief Mario Draghi on Thursday delivered on a pledge to do whatever it takes to pull Europe out of a deep and prolonged slump. The central bank will buy 1.1 trillion euros ($1.3 trillion) worth of government and corporate bonds through September 2016 — longer if necessary — to shrink the euro’s value, boost exports and encourage borrowing, spending and hiring.

“The ECB has made its move,” says Jacob Kirkegaard, senior research fellow at the Peterson Institute for International Economics. Now, “the euro area needs to go to work.”

Collectively, the economy of the 19 nations in the currency alliance eked out growth of just 0.2 percent in last year’s third quarter. Now that the ECB has acted, here are five things the economy needs to revive itself: Government spending, consumer confidence, more exports, economic reforms and stronger banks.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza