Photographer: Marc Hill/Bloomberg

Italy unexpectedly returned to recession and German factory orders dropped the most since 2011 as political tensions and slowing global growth threaten the euro area’s recovery.

Italy’s economy shrank 0.2 percent in the second quarter after contracting 0.1 percent in the previous three months. German orders slid 3.2 percent in June from May. Both reports were worse than forecast by economists in separateBloomberg News surveys.The figures come on the eve of the European Central Bank’s August interest-rate meeting, two months after it announced an unprecedented package of stimulus measures including a negative deposit rate and targeted loans to banks. Those policies will take time to have an impact, leaving the economy at risk from a crisis in eastern Europe that is already undermining business and investor confidence.


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