Every cloud has a silver lining – eventually. The Eurozone has been very hard hit by the Global Financial Crisis and then the European Sovereign Debt crisis which was triggered when it became just how economic Greece had been with the truth when joining the Euro at its inception. It took a lot to repair the fences and ensure that the Eurozone would neither be susceptible to a future banking crisis or from contagion should a weaker member states troubles look like spilling over: Greece take note. As a result of this, demand within the Eurozone and confidence have been at pretty low ebbs. The bloc has weathered the unemployment high tide and it has subsided from a high of 12% in February 2013 to stand at 11.3% currently which is still well above the long-term average figure of 9.7%, but is at least moving in the right direction. Even Spain and Greece have seen employment prospects improving, coming off highs of 25.1% and 28% to stand at 23% and 25.4% respectively.
The European Commission (EC) has revised its growth forecast for the Eurozone upwards from 1.3% (February) to 1.5% (currently) for 2015. The revision was made on the basis of ECB QE measures, a weaker Euro and the fall in the oil price. Of course, by extension, every silver lining has a cloud and the obvious elephant in the room is the on-going Greek debt crisis. With no accord in sight and Greece plainly running out of cash to meet its financial obligations, the EC has had to cut its projection for Greek growth in 2015 from 2.5% to just 0.5%.
The Greek ability to pay its debts is on life-support at the moment. The Greek government is at pains to say that it intends to meet its obligations in full, but with impending payments to the IMF and ECB this month. It should repay the IMF €1 billion by next week and has to deal with over €6 billion of maturing bonds. Given a political solution, the bonds could probably be rolled over, but few would have the stomach to take on longer-term Greek debt now with the nation staring a sovereign default in the face.