Wednesday, 14 August 2013

French and German growth better than expected

The latest figures chime with other data that had shown a stabilisation in the euro zone economy, such as the purchasing managers' index. But the headline figures still mask underlying problems in the currency area. Cyprus and Greece, for example, remain in deep recessions, while Italy, Spain and the Netherlands are also still mired in recession, although the pace of decline has eased. 

The Economist Intelligence Unit remains cautious with regard to the euro area's economic prospects for the second half of the year and beyond. Domestic demand in many parts of the currency bloc will remain constrained by elevated unemployment, fiscal austerity (especially in the euro zone periphery), high debt levels and still-tight credit conditions for many small and medium-sized enterprises in the struggling economies. Some support for growth will come from external demand as the global economic recovery continues, but we still expect only subdued growth in the second half of the year for the euro area as a whole. The recovery is likely to remain slow and gradual in 2014.

More on the eurozone economy at www.eiu.com

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