Eurozone growth 'soft patch' could drag on into 2011: S&P

3rd August 2011, Comments 0 comments

A second quarter "soft patch" in eurozone growth may well extend into the second half of 2011, ratings agency Standard & Poor's said in report on eurozone growth prospects published on Wednesday.

Recent data showed "a worrisome picture for growth" and reinforced the "view that the eurozone may be experiencing a more prolonged period of weak economic growth than initially anticipated," S&P said.

On Tuesday, the Purchasing Managers Index (PMI) leading indicator showed output growth slowing sharply with the indices for Germany and France hitting nearly two-year low levels.

The results signalled "a near stagnation of private sector output" in the 17-member single currency zone, S&P said.

S&P also noted that the European Sentiment Indicator fell for the fifth month running in July, with the heaviest drops recorded in Italy and Spain.

The "survey ... suggests that economic weakness is more deeply rooted," the agency said.

"More precisely, it strengthens our opinion that the divergence in growth rates between eurozone countries is widening," it said.

© 2011 AFP

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