Shoppers Rescuing Eurozone Growth as Exports Slow

U.S. rating agency Standard and Poor's said Wednesday a budding eurozone recovery was gathering steam thanks to consumers loosening their purse strings.

In a report entitled "Hangin' In There Despite Weak Foreign Demand", it said domestic demand had emerged as a main driver for growth, offsetting export weakness.

"The latest indicators show that stronger domestic demand is overcoming soft exports, which suggests that the eurozone upturn continues to forge ahead," it said.

Consumers in the eurozone had provided "a welcome boost" to growth, most pointedly in powerhouse Germany, but shoppers were starting to spend more elsewhere, too.

Recent developments may be overtaking the European Central Bank's more gloomy analysis of the eurozone economy, Standard and Poor's said, recommending that the ECB refrain from hasty monetary easing in its fight against the spectre of deflation.

The central bank is widely expected to expand its quantitative easing (QE) programme, which pumps cash into the banking system in the hope that it will find its way into the real economy, stimulating demand.

"The ECB is putting too much pressure on itself too soon, as QE programmes typically need time to produce some effects," Standard and Poor's cautioned.

The agency said, however, there was still much uncertainty concerning any sustained recovery in corporate investment, which it identified as the "main way for the eurozone to lower its stubbornly high unemployment levels."

Growth in the 19-nation eurozone slowed to 0.3 percent in the third quarter, official data showed earlier this month, with the economy in Germany cooling as France returned to expansion.