23 June 2012

EU accord on 130b euro growth plan

GERMANY, Italy, France and Spain agreed to cooperate on a growth plan of as much as 130 billion euros (S$208 billion) for the 17-nation bloc.

The leaders of the eurozone's four top economies (Germany, France, Italy and Spain)  had agreed to mobilise "one per cent of European GDP, that is 120 to 130 billion euros, to support growth", a move German Chancellor Angela Merkel hailed as "an important signal".

My comments to this news is that, if all the 17-nation could come to the agreement to boost the economy together as well as to work closer on fiscal policies by reducing the sovererign debt level, the chances of any of the nation to exit from Eurozone would be getting lesser. The near term market outlook would become better, but requires closer monitoring.

Euro could be streghten in short term, after the recent falling in value compared to US dollar. I would also foresee a better stock market outlook in Eurozone as well as in Asia market, as this could be seen as a sign of Eurozone countries to work together to avoid the Eurozone economy to be hurt further. 

To date, Spain and Italy are the two countries which are in the spot light for their high debt-to-GDP ratio after the Greece election. There are mix sentiment on these two countries on how successful they deal with the sovereign debt repaying given recent higher yield in the debt auction market. 

Source: businesstimes.com.sg

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