Europe should pull out of recession in late 2012: S&P

Although the current recession in Europe will probably extend into the third quarter, we believe the economy may pick up modestly late this year and in 2013, said Standard & Poor’s today in announcing the publication of its report ‘No Fast Lane Out Of Europe’s Recession’.

“Germany and other core northern countries of the eurozone should see sluggish GDP growth this year, while their southern neighbours - namely Italy, Spain, and Portugal - are likely to experience a genuine recession,” said Jean-Michel Six, Standard & Poor’s EMEA chief economist.

[caption id=“attachment_266501” align=“alignleft” width=“380” caption=“Germany and other core northern countries of the eurozone should see sluggish GDP growth this year.Reuters”]  [/caption]

A gradual strengthening in demand from emerging markets should provide some support given the ongoing easing of monetary policies in most of these markets. And the likelihood that households will draw on their savings should at the same time buttress consumption in the core countries of the European Economic and Monetary Union (EMU, or the eurozone) - Germany, the Benelux (the economic union between Belgium, The Netherlands, and Luxembourg), and France.

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In addition, the actions that the European Central Bank has taken to support banks since December 2011 via its Long Term Refinancing Operations (LTRO) seem to have lifted investor confidence, as the recent narrowing in sovereign bond spreads attests.

Reuters