Bank of America: Concerns over continued euro zone recession overdone
Bank of America said the risk of a prolonged recession in the euro zone was lower than some gloomy forecasts, with other data pointing to a more resilient economy.
While the latest Purchasing Managers’ Index (PMI) figures added to concerns over the continuation of the bloc’s winter recession, economists Alessandro Infelise Zhou and Ruben Segura-Cayuela wrote in a note to clients on Friday: “Recent hard indicators point to That’s not the case.”
The bank’s own confidence indicators and the European Commission’s survey both showed “weak signs of recovery,” the report said, citing growing optimism among European residents, resilient services sector activity and a strong tourism sector. They estimate that euro zone GDP rose a modest 0.1% in the second quarter.
Germany, which is struggling to emerge from recession, is lagging other economies, Bank of America said. Germany’s industrial output unexpectedly fell in May as lower water levels on the strategic Rhine added to concerns about Europe’s largest economy. The bank expects German industrial output to decline slightly in the second quarter.