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Western analysts not believe in beginning of economic recovery in Eurozone

Business Materials 17 August 2009 18:41 (UTC +04:00)

Azerbaijan, Baku, Aug. 17 / Trend , A.Badalova/

It is too soon to conclude that the Eurozone region is about to embark on a sustained recovery, analysts of British Capital Economics company believe.
"Unfortunately, there are several reasons why we think it is too soon to conclude that the region as whole, or even Germany and France for that matter, have begun a sustained recovery," Capital Economics Economist on Europe Ben May said.

Under the statistics on GDP in Q2, published by the Eurozone state last week, the economy of the region declined for the April-July only 0,1 percent. GDP of France and Germany over the period grew by 0.3 percent, stating, thus, about these countries' getting out of recession. In the first quarter of the year the economic recession in Germany was 3.5 percent and in France - 1.1 percent.

Despite positive indicators, Economics Minister of Germany Karl Gutenberg noted that there is still a long way for the full economic recovery, but these figures show that the strongest economic downturn is behind us.


The deceleration in the pace of decline was partly down to a sharp rebound in service sector output, which is unlikely to be sustained, May believes. Moreover, there is little evidence yet that the external sector is in any position to drag the region out of recession, the British economist said.

"Admittedly, there are signs from the German and French data that net trade boosted euro-zone GDP last quarter, but this was largely down to imports falling sharply, rather than exports surging. What's more, it will be some time before global demand rises strongly," May said.

In all, then, we now expect the euro-zone economy to shrink by about 4.0 percent, rather than 5.0 percent this year, the British analyst believes.

In 2010, the British analysts expect the economy to expand by a modest 0.5 percent, slightly higher than their previous forecast for the economy to stagnate. However, unemployment in the Eurozone, according to analysts, will continue to rise - it will be 10.2 percent in 2009 and 12 percent in 2010.

May believes Germany will remain the most rapidly developing country in the region, reflecting the competitive position of the country.

Followed by France and Germany, Japan also has announced about getting out the recession today. Growth of GDP for the second quarter was 0.9 percent.


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