Mario Draghi and the European Central Bank are scrambling to put the Eurozone back together, but is it helping? The recent move by the central bank included another deposit rate cut from -0.2% to -0.3%, meaning banks get charged -0.3% to hold their cash overnight; a six-month extension of the 60 billion euro per month bond purchase program; and a commitment to reinvest the principal payments of its bond holdings and expanding the range of securities to purchase to include regional and local government debt.


There are crucial issues that the ECB doesn’t address, however. Debt levels remain high, and in some countries, it’s increased. Exports are showing signs of uncertainty with weakness in emerging markets across the globe affecting the heavy hitters, Germany, France, Italy and Spain. China’s economic slowdown will continue to put a squeeze on Europe’s exporting of capital goods.

There are other external factors that are helping the Eurozone’s economic recovery that aren’t sustainable. For example, oil prices won’t stay as low as they are for long. Problems with refugees, terrorism and political tensions will continue to cast uncertainty and reduce consumer and business confidence.

“The eurozone economy enjoyed a comfortably solid end to 2015,” says Markit chief economist Christ Williamson. “Though policy makers are likely to remain disappointed by the relatively modest pace of expansion and lack of inflationary pressures.”

Alas, it seems as if Draghi’s promises of a timely Eurozone recovery are just false hopes.

Growth in the Eurozone slowed in December, based on the Purchasing Managers’ Index. The PMI figure fell from November’s 54.2 to 54. Of course, any figure above 50 indicates growth, so it’s not likely to be a major issue. Germany continues to see solid growth patterns, while France’s economy is slowing closer to stagnation.

You can thank the Paris terrorist attacks for that. France’s services sector took a major blow, leading to the country’s PMI falling from 51 in November to 50.3.

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