Eurozone starts to recover after 18 months of decline

 
Julian Harris
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THE EURO area has finally emerged from recession after six consecutive quarters of painful economic decline, statistics from Brussels revealed yesterday.

Initial estimates showed the single currency bloc’s GDP expanding by 0.3 per cent in the three months to the end of June.



The data marks the first turnaround in the Eurozone’s fortunes since it embarked on a sharp double-dip in the final three months of 2011.

Germany and France, the bloc’s two largest economies, drove the improvement, growing by 0.7 per cent and 0.5 per cent respectively.

“These core countries saw stronger domestic demand,” noted Berenberg’s Christian Schulz.

“Meanwhile, crisis countries benefited from external demand. Moderate global growth should allow these recoveries to continue... and the fading fiscal drag allow them to emerge from recession.”

Yet Schulz and other analysts warn that the Eurozone is not out of the woods quite yet. “Eurozone GDP is likely to teeter around meagre growth and mild contraction over the next three years,” predicted Ishaq Siddiqi of ETX Capital.

The figures show Italy, Spain and the Netherlands still suffering from shrinking GDP, yet Portugal displayed a notable bounceback with GDP rising 1.1 per cent, following a 0.4 per cent contraction in the first quarter.

Meanwhile, the latest Ifo indicator of world economic climate has fallen slightly in the third quarter. “The recovery in the world economy is not really making any headway,” it said.