The remainder of 2009 is still a period of economic downturn and rising unemployment in the Eurozone. The positive signs are beginning to see in 2010 and every reason to believe that growth will appear in slow motion. Will accelerate the recovery of the economy there? The International Monetary Fund (IMF) was not too optimistic about the prospects for the economy of the Euro by 2010. Today the site of Digital realized that the international agency expects the region to experience a slow recovery in 2010 and surrounded by uncertainty. The bet is that only the body reach a growth of 0.3%. The fears raised by the IMF leaves the impression that the mere fact that economic growth is good news, and should conform.
But 0.3% is too small a number to forward to the great mass of unemployed persons with which the Euro today, with the possibility of obtaining employment. I am thinking in the more than 3.1 million young unemployed under 25 years (the segment of the population hardest hit by the crisis), with the region. The poor economy with a 0.3% growth in this scenario would not have too much capacity to generate jobs, not even necessary to absorb entrants to the labor market.

The stage for the remainder of 2009 is also not overly optimistic, as presented, with an IMF anticipating a contraction of 4.8% of GDP in the region (although the European Commission is not so pessimistic that it expects and anticipates a contraction 4%). For businesses, there is also a risk of deflation affecting their profit margins. During the month of June, according to data from Eurostat, the euro showed his first interannual price deflation (which was 0.1%), since the euro. The logic of the entrepreneur who sees an economy that shrinks and margins are also shrinking products of lower prices, tends to consider that this is not a year to invest, or if there is the possibility of doing so, better to opt for alternative short term. To understand this way of thinking of European entrepreneurs, generate a vicious cycle that deepens the economic contraction in the Eurozone.

“We are evil, but so good” (Carlos Saul Menem, during his presidency in Argentina, 1990). This sentence clearly reflects the state of the economy of the Eurozone. In this regard, an encouraging sign for the industry was, as reported last week expansion, which in May reported its first monthly increase since August 2008, beyond that in terms the industry saw a downturn of 17% during that month. The growth experienced in the month is a sign that increases the hope for recovery of the industry in the euro area. The industrial production explains about 17% of GDP in the euro and there lies its importance in terms of the exit of the recession.

The solution to this situation of recession and recovery industry in the euro zone has a high dependency on what happens in the U.S. economy. Families and businesses are not too empowered as to boost domestic demand and hence economic growth. And on the side of the U.S. economy, improve the prospects for recovery at a good pace. The improvement in the U.S. economy and signs of moderation of the crisis in the euro, enhancing the humor come from families and businesses. So despite the bad omens about the economic growth for the region provided by the IMF in July and for the fourth consecutive month, climbing back to economic confidence by consumers and businesses. The index of economic confidence rose in July to 76 points versus 73.2 points the previous month. Analysts contacted by Dow Jones Newswires had forecast a more moderate increase, up 75.3 points. If the improvement in the positive mood of the private sector in the region, more so is the changing expectations in Germany. The improved economic conditions there, leading the euro zone economy and engine of the region is reflected in the strong growth of the IFO business confidence index and the purchasing managers’ indices show a clear recovery in the growth prospects for the first economy in the eurozone.

These high expectations help to turn the decisions of households and businesses, but still needs something else to be reflected in improvements in economic data. A key and very important to underpin the economic recovery through the financial system. In this sense, there is still a strong decision of both companies and families as banks begin to recover by the credit market from both sides. In fact, the European Central Bank (ECB) has just informed a few days ago that the growth of bank lending to households and businesses within the euro area fell in June to its lowest level since 1992, with a poor growth of only 1.5% year on year.

The generation of funding for the economy and the recovery in external demand (mainly from USA and China) are the key to the end of the recession and the start of economic growth in the Eurozone. Not so they can make the European governments and the ECB as they can affect these two factors explain the strength with which the economic recovery will occur. Yet there are great expectations for 2010, but as we were surprised by the depth of the recession, we would not miss a stronger recovery in the Eurozone.

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