Euro Zone GDP: a show of fragmentation

In spite of return of inflation and confidence from European Central Bank (ECB) officials, latest GDP statistics shows, there are still considerable slack remain across Euro zone countries and growth remains quite diverge.

However, despite the slack in the economy, it can be said that growth is returning and recovery is in progress and economic slack is pointing that it will take several years before European Monetary Union returns to its full potential.

Naturally, European Central Bank (ECB) will keep monetary policy over the longer against expectation of any tapering.

Key highlights:

• Seasonally adjusted GDP rose by 0.3% in European monetary union (EMU) in second quarter of 2015, compared to the previous quarter according to flash estimates. Seasonally adjusted GDP rose by 1.2% in the euro area in the second quarter of 2015, from a year ago.
• Growth was negative in Finland (-0.4%).
• Highest level of growth was recorded in Latvia at 1.2%, followed by Spain (+1%), Slovakia, Estonia and Greece (+0.8%).

As growth remains weak, ECB is likely to continue its bond purchase without any tapering or restructuring.

That makes European assets look more lucrative as growth returns. Euro is currently trading at 1.115 against dollar and Eurostxx50 is trading at 3500.