The Week in Review: Australia, Eurozone Mixed as Greek Default Nears

The Eurozone has seen improving inflation and unemployment figures, while a Greek default is challenging expectations of a steadily improving European economy.

European leaders continue to negotiate a settlement of the ongoing Greek debt crisis, as the Greek Prime Minister Alexis Tsipras met with Eurozone creditors to find a way to restructure the Mediterranean country’s debt load. The hope is that the two groups can find a way to help Greece avoid defaulting on its loans, which is likely to happen by the end of this month, if not sooner.

The Eurozone has seen improving inflation and unemployment figures, while a Greek default is challenging expectations of a steadily improving European economy.

European leaders continue to negotiate a settlement of the ongoing Greek debt crisis, as the Greek Prime Minister Alexis Tsipras met with Eurozone creditors to find a way to restructure the Mediterranean country’s debt load. The hope is that the two groups can find a way to help Greece avoid defaulting on its loans, which is likely to happen by the end of this month, if not sooner.

Greece is facing an IMF payment today, which many believe it will be unable to pay in full. However, at a press conference PM Tsipras told reporters that the pending payment was not an issue. “Don’t worry about it,” he said.

In a recent editorial published in Le Monde, a French newspaper, Tsipras wrote that the European Union was morphing into a power grab that did not respect the democracies of constituent members, and that the EU would need to be more flexible in meetings.

“It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people,” Tsipras said, alluding to the Bundesbank and German policymakers, who have insisted on a large budget surplus to pay back debts. Most economists believe the German tactic is stifling growth in Greece and making it harder for the country to pay back its debts, in turn causing unemployment to stay unsustainably high and resulting in homelessness, a lack of access to proper medical care, and other social problems in the country.

Inflation, Unemployment Hint at Hope

While the Greek situation remains a difficult one, inflation rose in the Eurozone and unemployment fell, two signs that the ECB’s aggressive quantitative easing program are in fact helping the region return to economic growth.

The data also showed that unemployment remains extremely high—higher than at any point between 2009 and 2011, and far higher than before the global financial crisis of 2008.

Australia Growth, Incomes

This week also saw Australia announce a surprise acceleration of economic growth, to 0.9% rise in the first quarter, on a strong rise in exports despite falling demand from China, the country’s largest trading partner, and weak commodity prices. The country nonetheless saw strong exports, which offset shrinking domestic demand in several sectors.

Australia also is seeing incomes fall, with real gross domestic incomes shrinking by 0.2% from a year ago. Disposable household income was flat on a year-over-year basis.

As a result of weak income growth, consumption rose by only 0.5% in the first quarter, which is also causing business investment to fall.