Tracking the euro-zone economy in real time

THE short-term outlook for the world economy seems to hinge on whether a resolution to Europe's debt crisis can be found. A resolution, in turn, will be difficult to come by if the euro zone falls back into recession. If output is shrinking and unemployment rising, then austerity measures are likely to make economic conditions worse while raising very little new revenue. The euro zone may fall ever deeper into a hole.


That's an unnerving possibility given the outlook for the euro-zone economy. The euro-zone economy probably contracted in the fourth quarter, according to an analysis of recent data points by Now-Casting, which publishes "real-time" economic forecasts. You can see the information that goes into their forecast in the interactive chart below. A negative fourth quarter has been a real possibility since July. Recent data do suggest that the fourth-quarter decline may not have been as bad as once seemed possible, and output in the first quarter is close to returning to positive territory. Early signs indicate that expansion may be back in the cards as of the second quarter. Moderation in industrial output figures that not long ago were showing big declines helps explain some of the rebound. Improvement in the euro zone's trade balance also helped. Imports were flat in November, thanks to weak domestic conditions. But exports rose, pushing the euro area's November surplus to €6.9 billion, up from just €1 billion in October.



Source: The Economist.com