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Business

Eurozone Bounces Back

The euro-zone economy could be on the road to recovery soon after output contracted for the first time in nearly a decade.

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"Growth targets realistic"

The economic output of its dozen members contracted for the first time in nearly a decade in the last quarter of 2001, official data showed on Tuesday.

But growth was 0.6% stronger than the same period a year earlier – a first sign that the economic slowdown in the eurozone could be over.

In its first snapshot of the economy since September 11, the EU statistics office Eurostat said gross domestic product fell 0.2 percent in the fourth quarter compared with the third.

The European Commission also said a recovery may already be underway, but that the latest figures also suggest that the recovery may be moderate, a view backed by the European Central Bank.

The ECB’s chief economist, Otmar Issing, said he reckons that eurozone economic growth will recover in the second half of the year.

In an interview with a French newspaper, Mr Issing said the eurozone's growth target of between 2% and 2.5% in 2002 was "realistic".

Germany still weak

But new trade figures from Germany showed that Europe's biggest economy is still mired in recession.

The country's trade surplus grew, but largely because imports fell, while exports also declined.

Moreover, rising unemployment means that economic growth in Germany may lag behind the others for some time to come.

Rosy picture

Confidence in better economic prospects has been boosted by positive comments from top central bankers.

Sir Edward George, governor of the Bank of England, spoke on Monday of an early spring for the global economy after chairing a meeting of the Group of 10 leading central banks.

But analysts said they do not expect the eurozone economy to return to its long term average rate of growth until the end of the year at the earliest.

According to many commentators the advent of an early economic spring will take more than talking up the prospects in the face of falling GDP.

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