It seems that the Eurozone is coming out of recession after 18 months of economic downturn. The GDP of the 17 countries forming the bloc grew by 0.3 pc in the second quarter of 2013 thanks to the performance of Germany and France.
According to the Eurostat agency, the German and French economies expanded by 0.7 pc and 0.5 pc respectively between April and June, the strongest growth in the region, driven primarily by consumer spending, industrial output and renewed business.
Portugal, among the smallest eurozone economies, posted the fastest growth, at 1.1 pc. The country was among the three which benefited from the multi-billion euro bail-out. The Spanish economy contracted by 0.1 pc, while Italy and the Netherlands reported a 0.2 pc drop.
According to European Commission Vice-President Olli Rehn, the figures show that the European economy was gradually gaining momentum, stressing that “there are still substantial obstacles to overcome” as the growth remains overall modest and fragile.
“A number of member states still have unacceptably high unemployment rates”, he added, stressing that “there is still a very long way to go.”
According to some economists and analysts, the European economy, which is deeply dependent on exports, especially to emerging markets, will need to find other sources of demand in order to generate sustainable growth.
The good news for the Eurozone in the first two quarters of 2013 was that things did not get worse. The bad news was that some of the Eurozone countries did not get better.
Many experts suggest that a sustained growth in the eurozone requires stronger private consumption and an increase in government expenditure, investments & exports.
The Eurozone is an export-oriented economy but the export structure in this economic bloc has changed, especially in terms of destinations.
After the global financial and economic crisis, Eurozone exports to the BRIC countries (Brazil, Russia, India and China), grew by more than 20 percent annually. In 2012, intra-EU exports stagnated, while extra-EU exports expanded by 9 pc. China has seen the biggest increases in Eurozone exports.
But the reliance of the Eurozone on exports to escape the recession makes it dependent on the growth in emerging markets, which is a highly risky bet.
