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Friday, November 14, 2003

Eurozone Economy: Over the Worst of it's Woes

I'm sorry, I really don't know whether to laugh or cry when I read journalists putting out this kind of phrase. It's clear that there is some kind of tentative upturn in the eurozone. This is good news, but apart from that it's very much wait and see time. One thing I can say, categorically - although not without fear of contradiction - is that the eurozone (and in particular it's largest economy Germany) is not 'over the worst'. It seems it's going to be more a case of: 'just when you thought it was all over, you found out it was only just begining'. (BTW: it seems my difficulty in knowing when to laugh and when to cry is congenital: see here).

Europe took a tentative first step on the road to recovery on Thursday when the region's two heavyweight economies, Germany and France, expanded at their fastest pace for more than a year. But the upturn, heralded in recent weeks by a flurry of optimistic sentiment surveys, remains on a fragile footing and might yet be stifled by a renewed strengthening of the single currency, economists warned. Germany, the eurozone's biggest economy, shook off its second recession in as many years in the third quarter. It expanded 0.2 per cent, its first growth since the same period of last year. The French economy rebounded strongly in the three months to September, with gross domestic product rising by a bigger-than-expected 0.4 per cent after a 0.2 per cent contraction in the second quarter. The Dutch economy also climbed out of recession, registering growth of 0.1 per cent after three quarters of contraction. Economists said the data suggests Friday's "flash" estimate of third-quarter eurozone growth - which will also include Italian figures showing it, too, returned to growth - would come in at 0.3 per cent. The estimate will confirm the eurozone is now over the worst of its economic woes. But it will also underline the slow pace of Europe's recovery compared with the accelerating pick up in the US and Asia.
Source: Financial Times

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