European stock indexes are positive this morning following better than expected eurozone manufacturing data but the focus remains on Greece after progress was reached yesterday with Greece’s creditors over a debt bailout, although a remaining agreement still needs to be reached by Wednesday.
Eurozone economic growth hit a 4 year high in June, according to latest PMI survey data released this morning from Markit.
Growth picked up momentum in both services and manufacturing at the end of the second quarter, led by strong manufacturing growth in France and Germany.
“Despite the cloud of the Greek debt crisis hanging over the region, the eurozone saw economic growth accelerate to a 4 year high in June” said Chris Williamson, Chief Economist at Markit.
Williamson believes the positive momentum will continue as long as the outcome of the Greek debt standoff is not damaging to economic growth in the eurozone.
“The second quarter upturn signaled by the PMI puts the region on course to expand by around 2 percent this year, though much of course depends on the outcome of the Greek debt negotiations and any resulting impact on growth in the second half of the year” Williamson said.
Early on Monday Greek leaders presented a new set of proposals that is more aligned with their creditor’s conditions and, if approved, it would allow Greece to receive more bailout funds.
There won’t be any near term agreement with Greece’s creditors over debt relief for Greece because there’s no mention of it in the new proposals.
According to the latest proposals that Greece presented, VAT is increased and Greece’s pension system would be reformed to raise the retirement age to 67 years.
Some of the other proposals include taxing companies earning more than €500,000 and a tax on luxury yachts, among other measures.
The details of the proposals will be reviewed today and Wednesday before a later meeting on Wednesday evening with eurozone finance ministers.
If approved, the bailout package would still need approval in Greece’s parliament which has a Syriza majority.
Yesterday ECB President Mario Draghi told Greek Prime Minister Alexis Tsipras in a meeting yesterday that the ECB will help secure the country’s banking system as long as Greece is in an aid program, a Greek government leader told reporters yesterday.
The ECB has increased its emergency funding for Greece’s fragile banks which saw deposit outflows last week of €4.2 billion amid fears of capital controls and a possible Greek default.