Euro Area to Exit Recession in Second Quarter, Institutes Say

The 17-nation euro economy will exit its recession in the second quarter as exports to the U.S. and emerging markets pick up, research institutes in Germany, France and Italy predict.

The economy will grow 0.1 percent in the second quarter and 0.2 percent in the third after stagnating in the first three months of the year, the Ifo, Insee and Istat institutes said today in a joint report.

“Demand from emerging markets will expand at an increasing pace, reflecting monetary and fiscal easing,” and “growth in the United States is also expected to be buoyant and support euro-zone exports,” the institutes said. Private consumption will stabilize in the second and third quarters “as a result of a decline in inflation and more gradual fiscal consolidation despite the persistent increase in unemployment,” they said.

The institutes forecast that inflation will slow from 1.8 percent in the first quarter to 1.6 percent in the second and 1.5 percent in the third.

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