Europe to formally exit recession

Europe's deepest recession since World War II should officially come to an end on Friday when the European Union publishes figures universally expected to show a collective return to growth.

Data particularly focused on the 16 countries that use the euro currency -- led by France and Germany, already out of the mire between April and June -- is tipped by analysts to show July-September growth of at least 0.5 percent.

A trio of top economists from BNP-Paribas, IHS Global Insight and HVB UniCredit Group each predicted that minimum figure on Thursday after new numbers showing rising industrial output reinforced a slew of positive data.

In the first quarter of 2009, the eurozone economy shrank a record 2.5 percent but came close to positive territory in the second, shrinking by 0.2 percent as France and Germany returned to growth at 0.3 percent each.

After five quarters of falling output, the European Commission had warned in its most recent economic forecast that the upturn would be "volatile" and "sub-par," primed as it was by ongoing government stimulus spending.Related article: Economists more upbeat

Unemployment across the 27-nation bloc, running at more than 22 million at the last count, is acting as a brake on EU expansion as is a weak dollar that is boosting US exports and holding back rival European goods and services.

Nervous consumers, cushioned by ultra-low interest rates, also fear a double-whammy of rising repayments on loans and a sharp escalation in prices when the drip-feed of state economic support is eventually scaled back.

The global credit crisis forced EU governments to plough trillions of dollars into faltering banking systems and direct stimulus programmes such as car scrapping incentives in a bid to drive the economy forward.

But when France and Germany also publish their own third quarter gross domestic product data on Friday, the signs point towards growing momentum after both countries posted surprise second quarter growth of 0.3 percent.

The French central bank this week forecast growth of 0.3 percent in the third quarter and 0.5 percent in the fourth quarter, with growth for 2010 predicted to come in between 1.0 and 1.5 percent.

After eurozone industrial production rose by 0.3 percent in September, BNP-Paribas analyst Clemente De Lucia said "we can expect GDP to have increased by around 0.5-0.6 percent" between July and September.

Chief IHS Global Insight economist Howard Archer said the manufacturing figures reinforced the belief that Europe was "exiting recession," while Maccario Aurelio of HVB UniCredit Group also tipped growth of "at least 0.5 percent."

In October, eurozone private sector business activity grew at its fastest rate since 2007, with services expanding at the quickest pace in almost two years and manufacturing improving for the first time since May 2008.

But there are important stragglers, with non-eurozone banking giant Britain unexpectedly slumping 0.4 percent in the third quarter amid what the Bank of England calls "highly uncertain" recovery and "sharply" rising inflation.

Spain's economy also shrank 0.3 percent in the third quarter, according to preliminary figures out Thursday, with results in both countries acting as a drag on the EU as it strives to keep up with the United States and Japan.