The national industrial production figures for June provided further evidence that euro-zone GDP might have expanded in Q2. Nonetheless, a closer look at the data suggests that the figures are perhaps not quite as encouraging as they seem. The improvement largely reflects developments in German and France, a sign that economic divergences within the region remain firmly in place. What’s more, the rise in production appears mainly to be down to firms expecting demand to rise in the future, rather than a pick-up in orders. If firms’ expectations prove to be too optimistic, the recovery may fizzle out.
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