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Is the weakness in Europe really about external demand?

Yes, according to RBC

The narrative in the market is that Europe is weak but many members of the ECB’s Governing Council tell a different story. Europe is fine, they say, but external demand has faltered.

Analysts at RBC continue to believe that’s true.

The real weak areas are China, Poland, Russia and Turkey, which collectively make up 20% of eurozone exports.

This chart shows various German exports to China and the slump is inarguable.

The goods news is that China has been stimulating via a flood of credit and that could filter back through to Europe later in the year however there is no evidence of a pickup in eurozone exports yet.

“The prospects for the euro area in the second half this year remains highly dependent on recovery in key export markets,” RBC writes.

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