The eurozone ride gets a little scarier. Jürgen Stark, European Central Bank executive board member, warned in a speech in Leipzig this morning that growth in the first half of this year would probably be more restrained than in the final six months of 2009. Stark heads the economics department at the ECB, so his projections should be as good as anyone’s. Stark, a former Bundesbank vice president, insisted this did not mean a “double dip” recession, rather it was consistent with a gradual and bumpy (“holprigen”) recovery. But it suggests we could be in for some gloomier economic news in coming months.
More striking – to me at least - were Stark’s comments on economic imbalances within the eurozone. He devoted a large part of his speech (and a few charts) to comparing wage costs and current account deficits/surpluses across the 16-country region. Read more