The Euro is headed downwards against the dollar for 2014, says Shayne Heffernan of Heffx. The European Commission’s forecast of 1.2% growth in 2013 is overly optimistic.
Their forecast is more a case of building confidence in the Euro and Eurozone than one based on economic facts, he added.
Heffx is part of The Heffernan Group, one of Asia’s leading financial services companies.
Shayne Hefferman says he is lowering his forecasts for the Eurozone GDP growth for 2013/2014. He has also set a 2014 target of $1.24 per Euro.
Hefferman forecasts a contraction of overall activity of ½ percent for 2013 in the Eurozone area, and growth of less than 1% for 2014, “weaker than previously projected”.
The EU Commission said that in 2013, the countries that use the Euro will slide even deeper into recession than had been anticipated. The Commission said GDP for the Eurozone would contract by 0.4% and 0.1% in the whole of Europe, including EU members that do not use the Euro as their currency.
The EU Commission believes GDP growth will pick up again during the second half of 2014, and will continue to grow slightly next year by 1.2% (1.4% in the whole of Europe).
If things go according to plan, the EU Commission forecasts new debt in the Eurozone will be 2.9%, below the 3% threshold of the stability pact.
For the entire EU, including countries that do not have the Euro as their currency, a deficit of 3.4% has been forecast. Heffernan writes “Thus, the debt ratio – the ratio of government debt to GDP – in the European States will remain high. Inflation too is expected to remain at a low level in 2013 and 2014.”
Unemployment figures don’t help the Euro
In the countries that use the Euro as their currency, 26.424 million people are unemployed. According to a June report, unemployment fell in ten Member States and rose in 17.
The steepest unemployment increases/decreases were seen in:
- Cyprus – from 11.7% to 17.3%
- Greece – from 23.1% to 26.9%
- Slovenia – from 8.8% to 11.2%
- Latvia – from 15.5% to 12.5%
- Estonia – from 10.1% to 8.%