Growth Returns to Euro Zone

The gross domestic product in Germany, the broadest measure that is produced of goods and services across the region was up 0.7%  during this year’s second quarter.

That means the economy in the euro zone had emerged from its recession stronger than was expected in the past three months ending June 30. However, the answer to its current fiscal and banking crises remains a long-term project.

The official agency for statistics for the European Union, announced on Wednesday that the combined GDP of the 17 members of the common currency was 0.3% up from the first quarter of this year, but still lower by 0.7% than the same quarter a year ago.

Nevertheless, it was the region’s fastest expansion for a quarter since the first quarter of 2011.

The forecast for analysts on Wall Street predicted an expansion from quarter to quarter of 0.2%, with a year-to-year fall of 0.8%.

The return to growth in the euro zone following six consecutive quarters of contraction in part was thanks to Germany, its largest and strongest economy. The country had the fastest quarter of expansion amongst the large developed economies.

The economy in France also played a part with an expansion of 0.5% according to Insee, the statistics bureau. However, a greater surprise for many was Portugal. The economy picked up 1.1% during the quarter, which was by far the biggest growth rate across Europe.

Portugal is currently amidst its third year of a bailout by international banks and governments and had not seen any growth in its economy since the last quarter of 2010.

It returning to a growth mode so strongly will help to encourages policy makers in the euro zone to believe that next year it will be self-reliant financially, which was planned.

It might also ease some of the pressure Pedro Passos Coelho, the Prime Minister and his government has faced of softening the austerity measures ahead of September’s elections.

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