Low point of eurozone recession reached – Raiffeisen Bank

05 April 2012 11:00  [Source: ICIS news]

LONDON (ICIS)--The low point of the eurozone recession has already been reached, with growth to resume in the second quarter, Raiffeisen Bank International (RBI) said on Thursday.

On current indicators, Eurozone GDP will shrink by 0.5% in 2012, but grow by 1.1% in 2013, added Valentin Hofstatter, a research expert at Austria-based RBI.

Analysts at RBI said they had noted “the frail arrival of spring in the eurozone”.

But, Hofstatter said: “Survey indicators have tended to show a discernible improvement since the winter months. That is in line with our existing forecast that growth will resume in the eurozone from the second quarter.

He also noted increasing GDP divergence between core and peripheral euro states.

“It is interesting that the divergence is continuing to grow between the core euro countries clustered around Germany and the peripheral euro states. The GDP estimates for all countries along the southern flank had to be corrected further into negative territory,” said Hofstatter.

Raiffeisen Research expert Veronika Lammer added that the large emerging market economies outside Europe seem to have passed the low point of economic activity.

Lammer said China was not expected to suffer an economic “hard landing”, pointing to two factors that should assist eurozone growth.

The gradual loosening of monetary policy in China and the wide range of fiscal measures being taken will enable the country to slightly exceed the official growth target of 7.0%.

And Brazil has slashed interest rates and is holding its currency, the Real, at a relatively weak level in order to stimulate domestic demand.

By: Will Conroy
+44 20 8652 3214

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