Three Economic Shocks to the Euro Area to Trouble ECB’s Draghi

(Bloomberg) --

The euro area is in a funk: Trade performance has faltered, industrial production is stumbling and factory orders are falling. The risk is that things get worse -- a hard Brexit, a European trade war with the U.S. or a slump in China would be big shocks. As the European Central Bank prepares to inject more stimulus into the economy, Bloomberg Economics calculates that 7.6% of euro-area activity is directly exposed to trade with the U.K., U.S., and China. Given the scale of these risks and the toll they are already taking on sentiment, it’s unlikely the ECB will wait until they fully materialize before taking action.

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