Light at the end of the tunnel for the beleaguered eurozone emerged today as economic powerhouse Germany showed signs of dragging the region out of its double-dip recession.
The latest snapshot of the eurozone’s manufacturing and services firms across the single currency bloc revealed a much shallower economic decline than feared during the first half of December, fuelling hopes that the region is over the worst effects of a debt crisis lingering for nearly three years.
The European Commission had been braced for the eurozone, the UK’s biggest export market, to remain in recession until the second half of 2013. But today’s industry surveys from financial data provider Markit signalled the downturn may have reached its deepest point in October, raising prospects of an earlier-than-expected recovery.
“A return to growth is looking like an increasing possibility in the first half of next year, barring any surprises, if the recent improvements in the survey data can be sustained,” Markit chief economist Chris Williamson said.
The figures showed Germany is the main driver of the upturn after its fastest growth for six months, in contrast with the lingering problems in struggling southern countries like Spain and Italy. Confidence, while low by the standards of before the financial crisis, has picked up for the fourth month in a row, particularly in Germany and France.
The more upbeat news comes as China also provided cheer as the world’s second-biggest economy enjoyed its strongest manufacturing performance in more than a year.
The manufacturing purchasing managers index, a closely watched barometer of its economy, hit a 14-month high in December.
ING Bank economist Martin van Vliet said: “It is premature to assume that a return to sustained growth is just around the corner. That said, the improved conditions on financial markets and the pick-up in global growth momentum, as signalled by the further pick-up in the Chinese PMI, should steady the pace of decline from here on.
