While there is good reason to expect the Eurozone economy to recover over the next couple of years, progress is likely to be very slow
After falling by an estimated 0.5% this year, we expect GDP to grow by about 1% in 2014 and then by some 1.5% a year in 2015–17. This would mean that it would take eight years for the economy to regain its pre-financial crisis peak level of GDP.
Given the importance of exports to the recovery, we expect manufacturing to enjoy a turnaround in fortunes, with output falling by 0.8% in 2013, but recovering to grow by 1.7% in 2014. We expect financial and business to see an improvement; with output falling modestly, this year before accelerating to grow by 1.3% in 2014 as business confidence strengthens.
The outlook is weaker for other sectors, particularly those exposed to the consumer and government sectors. We expect construction to perform very poorly this year. We forecast output to fall by 3% as the combination of a lack of finance for both public and private projects and the continuing legacy of a long period of oversupply in a number of housing markets.