The eurozone is being coaxed out of the recession by the two leading economies in the region, Germany and France. Spurred by increases in trade, the two countries and their corresponding exchange traded funds (ETFs) have begun to see growth.
Germany and France each experienced 0.3% growth from the previous three-month period, Angela Charlton and Maria Danilova for Yahoo! News. In the previous quarter, Germany contracted 3.5% and France’s economy diminished 1.3%. The unexpected increase helped the eurozone to contract only 0.1% compared with the anticipated 0.5%.
The turnaround in the two countries is attributed to, among other things, government programs that supported the auto industries within the countries. The so-called “Cash for Clunkers” was one such program that helped economies by enticing consumers to buy again. The German government reported a rise of 7% in German exports during the month of June.
There are still some problems European countries need to grapple with, however. Europe still faces a rising unemployment rate and the expiration of the auto incentives could dampen consumer demand.
The better-than-expected performance of the region has helped strengthen the euro, which is around $1.40. But, a higher euro translates into more expensive eurozone products, which could hurt already beleaguered European manufacturers.
- iShares MSCI Germany Index (EWG): up 5.2% year-to-date
- iShares MSCI France Index (EWQ): up 10.6% year-to-date
For more information on European countries, visit our Europe category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.