The EU Recovers

(Thumbnail image from Photodisc)

“The Eurozone’s two biggest economy have come out of recession. France and Germany enjoyed a surprise return to economic growth in the second quarter of this year.” (euronews)

Reports of GDP growth in Europe’s two largest economies was just as much a surprise as the United State’s recent decrease in unemployment rates.

News that some of the world’s strongest economies may be turning around has many in the media speculating about the future of EU markets. So what does this mean?

CNBC business correspondent Martin Baccardax focuses on the EU as a whole, noting it’s still on a downward spiral.
 
“It has to be remembered as well, the whole of the euro zone did contract naught .1 percent, so the laggards around the edge are bringing down the engine room of the European economy, that being Germany and France.”

But British Business Secretary Lord Peter Mandelson offers a more optimistic perspective on the BBC, saying Germany and France will help recovery efforts in the rest of the EU.

“Different economies will show different patterns of behavior. But the key point is, that all these economies rely on each other. You know, 50-55% of our trade in Britain is with the rest of Europe so when the rest of Europe is recovering, that’s good news for our manufacturers.”

Jim Cramer’s financial news website, TheStreet.com says Germany and France’s escape from the recession could actually harm the United States.

“The market once again is repricing a weaker dollar… The U.S., the euro zone, Australia and some emerging economies seem to be on the road to recovery, and this will attract money away from the U.S. as investors look for higher yields.”

But an article in the New York Times says the EU may be the ones struggling in the long run.

“…economists expect a divergence in performance between the United States and Europe next year as lagging efforts to repair a damaged banking system in key countries like Germany and sharply rising unemployment tarnish the outlook in Europe over the next six months.”

Do you think France and Germany are on the way to spurring global recovery?