All politics may be local, but for business and the economy, global trends matter greatly–which is one very good reason to welcome this week’s news that the eurozone’s recession is finally over.
On Wednesday, the European Union’s statistics office said the economic output of the 17 EU countries that use the euro expanded 0.3 percent in the second quarter compared with the previous three-month period. Annualized, the growth rate was 1.2 percent.
That’s no one’s definition of a robust expansion, but it’s the first increase since the start of the eurozone recession in the final quarter of 2011. And both Germany and France–with quarterly growth of 0.7 percent and 0.5 percent, respectively–exceeded expectations.
Not all eurozone countries are back in positive territory, but even weaker southern European nations like Spain, Italy and Greece are heading in the right direction, with their contractions easing.
European officials opted for austerity to cure their economic ills, caused by mountains of government debt. By contrast, the U.S. strategy has been more expansionary–a key reason, many economists say, that the recovery here has moved at a faster pace.
Among other things, that has translated into a sharply narrowing federal budget gap. The Treasury Department reported Monday that the deficit for the 2013 budget year, through July, is $607.4 billion–down nearly 38 percent from a year ago. The full-year deficit is projected to be the smallest in five years.
Faster growth in Europe would increase U.S. sales to that market, producing higher corporate tax receipts. So the Europeans are not the only ones with much at stake in their recovery.
Indeed, with a higher level of international business activity than many communities in this country, Rochester has a clear interest in a return to growth in the eurozone and elsewhere abroad. Exports from the nine-county region have been up and down in recent years; stronger demand from European customers would help put export growth here on a consistent upward trajectory.
It will take years for the eurozone to fully emerge from the hole created by the debt crisis–and that’s assuming no more setbacks. That said, even slow growth in the key market is reason to cheer.
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