Recent indicators have supported the view that the euro-zone is now firmly in recession. GDP fell by 0.2% in Q2 after stagnating in Q1 and falling by 0.3% in Q4. And the business surveys so far point to a second consecutive contraction in Q3. Despite rising slightly in August, the composite PMI is consistent with quarterly falls in GDP of about 0.4% (see Chart), while the EC Survey paints a gloomier picture still. We continue to expect euro-zone GDP to contract by 0.7% this year overall.
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