The Eurostat figures published today confirm that the euro area has emerged from recession in spring. Compared with the previous quarter, seasonally adjusted real GDP was up by 0.3%. The two biggest economies in the eurozone,GermanyandFrance, recorded substantial growth to the tune of 0.7% and 0.5%, respectively, in the second quarter.
But the economy is also starting to get back on its feet in the crisis-ridden member states. At eight quarters running the downturn inItalyandSpainhas slowed considerably, with negative growth rates of 0.2% and 0.1%.Portugaleven posted the highest rate of GDP growth in the eurozone (+1.1%) in the spring months from April until June.
Comparing quarterly growth rates of core EMU countries with those recorded by the countries on the continent's periphery shows that the growth differential in the eurozone has narrowed considerably. While the economy in the peripheral countries (excludingGreece, for which no seasonally adjusted GDP growth figures are available) grew by around 0.1%, the core countries reported average growth of 0.4%. The weighted growth gap had still amounted to 1.2 percentage points as recently as in the closing quarter of 2012.
Soft leading indicators published for July, such as economic sentiment and the purchasing managers' indices, point towards a continued, geographically broad-based economic recovery with moderate quarterly growth.
Due to the statistical negative carry-over effect from 2012 and a shaky start to the year, the EMU economy is nevertheless expected to shrink by an average of 0.3% over the year as a whole. The pace of growth is likely to pick up next year, allowing for slight employment growth. Looking ahead to 2014, we expect the eurozone to achieve economic growth of 1.5%.