Eurozone Exits Longest Recession, Adding Driver to Global Growth
The euro area is now out of its longest recession after gross domestic product in the 17-nation euro area rose 0.3 percent in the April-June period after a 0.3 percent contraction in the previous three months.
The figures were released Wednesday by the European Union's statistic office.
Germany and France led the euro area out of the slump. Germany's GDP increased 0.7 percent in the second quarter, more than the 0.6 percent gain forecast by economists. France expanded 0.5 percent after two quarters of contraction.
However, at least four of the euro area’s 17 member countries remain in recessions, including Italy and Spain.
Spain saw its economic output fall by 0.1% on the quarter. while Italy's output dropped by 0.2%.
"There are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile," says European Commission Vice President Olli Rehn.
“We’re not seeing a recovery, it’s only a stabilisation,” said Sylvain Broyer, Chief Eurozone Economist at Natixis in Frankfurt. “What we need is a pick-up in productive investment and I don’t see that yet. You would need a good three to four quarters of positive growth in the euro area to expect the unemployment rate to edge down.”
Joseph Lupton, a senior global economist at JPMorgan Chase in New York, told Bloomberg the euro area's growth will be felt in markets and the world economy.
Lupton estimates that the euro area accounts for a fifth of global GDP. A one percentage point improvement in its economy this year will be enough to boost GDP growth elsewhere by 0.7 percentage point over four quarters.