Eurozone Quarterly GDP Contracts, First Time Since 1995
August 14, 2008
As widely expected Eurozone GDP fell into negative territory by 0.2% during the second quarter of 2008, marking the first quarterly decline since 1995. While the breakdown is not yet known, the drag on growth could be attributed to reduced foreign demand for increasingly pricey European goods. Various ECB members have already suggested that Eurozone growth is in for a protracted period of weakness and despite the persistence of inflationary pressures analysts expect that any potential for interest rate hikes are now all but gone. The Euro traded below 1.4800 against the U.S. dollar for the first time since February 26th 2008, following the GDP data.