Eurozone pulled out of recession by exports and government spending

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Eurozone pulled out of recession by exports and government spending

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The eurozone came out of its long recession in the second quarter of this year- expanding by 0.3 percent.

The was even good news from some struggling southern Europe nations. Portugal’s economy grew 1.1 percent, while Spain’s contraction was just 0.1 percent.

An analyst of the data from the European Union’s statistics office Eurostat showed the bounce was thanks to increases in exports and spending.

Exports to the rest of the world rose sharply between April and June after six months of falling sales.

At the same time spending by the region’s governments made the first positive contribution to the economy since late 2009 when Greece plunged the eurozone into its debt crisis.

“Everything is pointing to a recovery,” Dirk Schumacher, an economist with Goldman Sachs, said, adding he sees 0.1 percent growth in the third quarter. “We do have some divergence between countries, but the upswing is helping everyone to benefit.”

Firms in the euro zone – almost a fifth of the world’s economy – had their best month in over two years in August as orders rose for the first time since mid-2011, a separate survey showed.

A string of reports in recent days suggest renewed growth for the 17 countries sharing the euro. That would weaken the case for another interest rate cut by the European Central Bank when it meets on Thursday.

However, the eurozone’s fragility was evident in the muted shopping performance by Europeans during July; retail trade volumes increased just 0.1 percent, Eurostat said in a separate release.

EU policymakers say it is premature to say the eurozone’s crisis is over and call on governments to press on with the painful reforms that can return business dynamism to the bloc, beyond the expected improvement in the third quarter.