In spite of extraordinarily supportive monetary policy, the euro area economy is showing a considerable, and broad-based, loss of growth momentum since the beginning of this year.
The area's gross domestic product growth in the first two quarters has slowed to an average annual rate of 2.3 percent from a nearly 3 percent pace of advance in the previous six months. Industrial production during the January to June interval has been in recession, and retail sales barely eked out a 0.9 percent growth.
Some German government officials see nothing wrong with that. They are alarmed, instead, by a strong monetary stimulus provided by the European Central Bank and an energy-driven euro area consumer price inflation of 2.1 percent in July. Inflation's 0.3 percent monthly decline is conveniently ignored, and so is the fact that the core inflation (CPI minus food and energy) came in at only 1.3 percent — way below the medium-term objective of 2 percent.
Germany, of course, should have nothing to complain about: It has a fully employed economy, growing so far this year at a rate of 2 percent (considerably above its estimated 1.3 percent growth potential) and drawing nearly 40 percent of the total trade surplus from its hard-pressed euro area partners surviving on monetary life support.