EUR soars as EU economy contracts

The European Union Economic and Monetary Commission released their 2012 forecasts for the 17-nation currency. The expectation is for the Eurozone to contract 0.3 percent. This is a revised forecast from their November figures of 0.5 percent growth for 2012.

Spanish and Italian economies are projected to contract over 1 percent and will drag EU over its first  Europe wide contraction since 2009. The regulators tried to install some optimism: “Financial markets remain still rather fragile, but there are also signs of stabilization,” EU Commissioner Oli Rehn said earlier today.

Rampant unemployment and housing bubbles aftershocks will make all the PIGS governments struggle with the fiscal austerity measures to avoid a default or at the very least qualify for bailout aid from the stronger economies.

Quick outlook for the most prominent Eurozone countries in 2012:

Economies to contract

– Greece 4.3 percent

– Portugal 3.3 percent

– Spain 1 percent

– Italy 1.3 percent

Economies to grow

– Ireland 0.5 percent

– Germany 0.6 percent

– France 0.4 percent

You can find the full report in the European Commission’s website

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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