With confirmation that the Eurozone has finally emerged from its six quarter recession, posting 0.3 per cent GDP growth in the second quarter, economists now expect the area to move back towards more impressive growth figures.
Capital Economics stress the new purchasing managers' index data as a sign that signs of recovery are not anomalous:
Jonathan Loynes, chief European economists, Capital Economics:
The breakdown of Q2 GDP and more timely news on retail sales and the final PMI brought further confirmation that the euro-zone economy has embarked on a recovery. But growth rates look set to remain pretty anaemic.
Looking forward, more timely indicators also released today suggest that the eurozone economy has continued to expand in Q3, albeit at a modest pace.
The latest batch of euro-zone data provides further hope that Q2’s expansion was not a one-off. However, with the consumer outlook still weak, growth is likely to remain well below the rates needed to bring unemployment sharply lower or to address the indebted countries’ fiscal problems.
Howard Archer, chief UK and European Economist, IHS Global Insight:
The hope for the Eurozone is that current steadily rising confidence will encourage businesses to lift their employment and investment plans, and will also encourage consumers to spend more.
Nevertheless, the upside for domestic demand in the Eurozone is likely to remain constrained by a number of factors.
This is particularly true of the southern periphery Eurozone countries, but France and the Netherlands also continue to face significant headwinds. Meanwhile, global growth is still relatively muted, which threatens to limit the upside for Eurozone exports.
Consequently, while we expect the Eurozone to keep expanding, we believe growth will be limited. Consequently, we expect Eurozone GDP to contract by 0.5% in 2013, before growing by around 0.8% in 2014.