Eurozone comes out of recession

The eurozone has emerged from recession
after a record 18 months of economic
contraction.
The bloc's GDP grew by 0.3% in the second
quarter of 2013, slightly ahead of forecasts,
the Eurostat agency said.
The growth was widely expected after the
German economy rose 0.7% between April and
June.
However, the overall figure masks the mixed
economic fortunes among the countries that
make up the 17-country eurozone area.
Germany and France both posted stronger-
than-expected growth, expanding 0.7% and
0.5% respectively.
Portugal, among the smallest and the weakest
eurozone economies, showed the fastest
growth, at 1.1%.
The country was one of three that had to take
a multi-billion-euro bailout.
Obstacles
But Spain, which had to seek outside support
for its struggling banking sector, saw its
economic output fall by 0.1% on the quarter.
Italy and the Netherlands both saw output
drop by 0.2%.
European Commission Vice-President Olli Rehn
said the figures suggested the European
economy was gradually gaining momentum,
but added there was no room for
complacency.
"There are still substantial obstacles to
overcome: the growth figures remain low and
the tentative signs of growth are still fragile,"
he said.
"A number of member states still have
unacceptably high unemployment rates; the
implementation of essential, but difficult
reforms across the EU is still in its early
stages. So there is still a very long way to go."
Analysts from Capital Economics said: "The
return to modest rates of economic growth in
the eurozone as a whole won't address the
deep-seated economic and fiscal problems of
the peripheral countries."
Locomotive
The figures reaffirm Germany's position as the
powerhouse behind the eurozone.
The country narrowly avoided recession earlier
this year, but GDP in the second quarter of
2013 was driven up by demand from both
consumers and businesses.
The improvement comes just weeks before a
federal election that will see Chancellor Angela
Merkel stand for a third term in office.
Her economic adviser, Michael Fuchs, said
Germany had a great chance to be a
"locomotive" that led European growth.
But he was also upbeat about the prospects of
struggling eurozone members.
"I do believe that some of the countries in the
periphery, I mean southern periphery, are
doing better than expected," he said.
"I mean, if you see Spain... in Spain, the last
three quarters, the unemployment rate went
down. It's getting slightly better.
"They did reforms, maybe not enough yet, but
I believe that at the end of the day they will be
competitive again, but it takes some time."

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