August 15, 2006
This week provided a number of highly positive news for the eurozone economy. Not only accelerated growth strongly all over Europe, reaching 0.9 percent quarter-on-quarter (3.6 percent in annualized terms), there were also indications that domestic demand in Germany, the euro area's problem economy, gained further traction.
The surprise was not so much in the headline figures (production and trade figures had already pointed to a sizable acceleration), but in the backward revisions. As it turned out, the upswing in Germany has been much more steady for the past year than previously though. Moreover, growth has already reached 0.7 percent (2.8 percent annualized) in the first quarter 2006 when an adversely cold winter depressed construction output. At the moment, the year-on-year rate is even respectable 2.4 percent – not much by American standards, but quite impressive for an economy for which many economists estimate potential growth at little above 1 percent).