Eurozone: First growth since 2011

A strong rebound in Germany, Europe's biggest economy, helped pull the eurozone out of recession in the second quarter.

LONDON (CNNMoney)

Gross domestic product across the 17-nation area grew by 0.3% in the second quarter, according to official estimates released Wednesday. That's the first time the region has grown since the third quarter of 2011, and compares with a decline of 0.3% in the first quarter of 2013.

A rebound in the region's two biggest economies -- Germany and France -- and an easing of recession in the third and fourth largest -- Italy and Spain -- led the return to growth.

The German economy grew by 0.7%, after stagnating in the first quarter, while France bounced out of recession with growth of 0.5%, the fastest rate of expansion since early 2011 when Europe was battling to prevent a credit crisis tearing the single currency apart.

Both national numbers were stronger than most economists were expecting and pushed the overall eurozone reading above consensus forecasts for 0.2%.

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Consumers and businesses are becoming more confident about spending and investing, thanks to the European Central Bank's cheap money policy and a more relaxed approach to austerity by governments trying to bring their borrowing down.

"The ECB's promise to defend the bond markets of reforming eurozone countries has sowed the seeds for the confidence recovery and is helping the ECB's ultra-low interest rate policy to gradually gain traction," said Christian Schulz, senior economist at Berenberg bank.

Exports are also beginning to recover despite a mixed performance in other major world economies, with trade contributing to growth in both Germany and France. Latest data from China and Japan show growth slowing, but the U.K. and U.S. economies are accelerating.

First Published: August 14, 2013: 5:20 AM ET

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