The figures mean that the region’s economy grew by 0.5 per cent between the final quarter of 2012 and the end of 2013. In 2012 the region’s economy contracted on the back of fears that the monetary union could collapse. Mr Draghi’s pledge in the summer of 2012 helped to calm these concerns but it has taken time for this to feed through to the bloc’s households and businesses.
The latest data suggests this now happening in the crisis-engulfed periphery. Portugal smashed expectations, with its economy expanding by 0.5 per cent against forecasts of a 0.1 per cent rise. Italy came out of recession, recording growth of 0.1 per cent, its first quarterly expansion since the spring of 2011 . Spain grew by 0.3 per cent according to figures released last month.
Evelyn Herrmann, economist at BNP Paribas, said: “This is the third consecutive quarter of growth in the eurozone, but comes with the additional charm of much broader-based growth spreading beyond the core countries. Effectively, it was the first time since the first quarter of 2011 that all big five eurozone economies posted positive quarterly growth rates.”
France and Germany, the region’s two largest economies, beat expectations with growth of 0.3 per cent and 0.4 per cent respectively, while the Netherlands also expanded by a brisk 0.7 per cent. Insee, France’s national statistics bureau, also revised up its GDP figure for the first quarter, from its previous estimate of a contraction of 0.1 per cent to zero.
Peter Harrison, global head of equities at Schroders Investment Management, said the eurozone recovery was drawing investors. “It is as if there is still a lot of money coming out of all corners of the world and into Europe.”
“Europe is fantastically undervalued versus the US. As long as you believe European earnings are going to pick up, the trade is to switch to Europe,” added Jim McCormick, global asset allocation strategist at Barclays. The US S&P 500 index has also rebounded this week but by lunchtime in New York remained almost 1 per cent lower than at the start of the year. - (FT)