Is Cyprus Pushing The EU Down a Slippery Slope?
From there, the concern is that the contagion would spread and negatively impact the stocks and currencies of weak economies outside of the currency bloc, which have already suffered this year. In particular, Eastern-European markets have been among the worst performers. Bloomberg reports that the Czech koruna, the Hungarian forint, the Russian ruble, and the Polish zloty have slid 2.9 percent, 2.2 percent, 1.9 percent and 1.8 percent, respectively, against the euro this year.
These concerns have been fueled by a recent string of negative reports about the health of Europe’s economy. Unemployment in the 27-member European Union increased from 10.8 percent in January to 10.9 percent in February, according to Eurostat, the statistical office of the European Union. In the 17-member euro area, the seasonally-adjusted unemployment rate was 12.0 percent, an increase from 10.9 percent in the year-ago period.
Compounding Europe’s struggling labor market is the Markit Eurozone Manufacturing PMI report for March, which was also released on Tuesday morning. The report’s index of overall business conditions decreased from 47.9 in February to 46.8 in March, a three-month low
Separately, a Sentex index tracking investor sentiment fell to -17.3, its lowest since November. Sentex commented: “While the election in Italy led to the first setback for the euro zone index in March, the Cyprus issue is an additional strain in April: both sub-indices, the assessment of the economic situation and the 6-month expectations drop again to a similar degree. Expectations are now in the neutral zone.”
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