Euro-area recession seen over as champagne kept on ice

German Growth

As the pain in Europe’s periphery has eased, German growth has strengthened. The Economy Ministry said on Aug. 9 that the region’s biggest economy expanded “markedly” in the second quarter, driven by private consumption and industrial production.

Chancellor Angela Merkel will seek a third term as German leader on Sept. 22 on the strength of shielding her country from the worst effects of the euro area’s debt crisis. The Federal Statistics Office will release second-quarter GDP data before the euro-area number on Aug. 14.

Financial markets have largely avoided the volatility that marked previous years even as a change in Italy’s government stalled, Portugal’s coalition faltered, and Cyprus required a messy bailout. Draghi has cited the ECB’s unlimited bond-buying pledge, announced last year and so far untapped, as a reason for calmer markets. Yields on Spanish and Italian sovereign bonds have fallen in the past 12 months.

‘Not Overly Bullish’

“It all looks a bit better than we thought,” said Evelyn Herrmann, an economist at BNP Paribas SA in London. “Our central case is a very modest recovery, and we’re still not overly bullish for the second half of the year.”

Greece’s economy contracted for a 20th quarter, extending an economic slump that has left more than six in 10 young Greeks out of work, the Athens-based Hellenic Statistical Authority said today.

Gross domestic product shrank 4.6% in the three months through June from the same period last year after dropping 5.6% in the previous quarter. That’s better than the median estimate of a 4.9% contraction in a Bloomberg News survey of six economist. Greece doesn’t publish seasonally adjusted or quarter-on-quarter GDP data.

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