Some of the euro-zone business surveys have had a slightly stronger tone over the last couple of months. Nonetheless, at current levels, they remain consistent with a further contraction in activity in the single currency area. Meanwhile, the details of the first quarter’s small fall in GDP brought few indications that the economy is about to pull out of its prolonged recession. Accordingly, we remain sceptical of the ECB’s view that the euro-zone will embark on a decent recovery in the second half of this year and we continue to think that the consensus forecast of a 0.5% drop in GDP in 2013 is too optimistic.
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