Europe is recovering. Europe’s economy returned to annual growth in the last quarter of 2013 as a recovery gradually picked up pace. Eurozone GDP rose by 0.3% in the 4th quarter and by 0.5% compared to the same period of 2012. This was the first quarter of year-on-year growth in since 2011. This helped reduce the overall decline in Europe’s economy in 2013.
The growth in the four quarter was driven by the growth in France and Italy and a better performance in key economies such as Germany and Spain. France was able to grow its economy by 0.3% over the quarter, Germany, which is the strongest economy in the Eurozone, managed growth of 0.4% due to robust exports.
According to Berenberg economist Christian Schulz, the improving data reflects “the painful structural reforms undertaken across the region, new fiscal rules that should prevent a repeat of the debt crisis, and confidence in the European Central Bank.”
However, although some of the countries in Eurozone are doing better, there is a serious homework to do for most of the countries. The economy contracted by over 0.4% overall in 2013 and, as we are aware, Greece and Cyprus are still remained depressed. Output is also far below its pre-crisis peak. Not enough jobs are generated to lower the unemployment rate, and there is still a risk of deflation.
Let’s wait for Friday’s GDP data for some hopes.