Recovery starting to falter

The euro-zone’s economic prospects appear to have taken a turn for the worse amidst continued worries over the periphery and signs that the recovery in the core economies is starting to lose momentum. Surveys such as the PMI point to a sharp slowdown in GDP growth in Q3 compared to Q2. While export growth remains strong, survey measures of export orders already point to a slowdown (see Chart) and the recent rise in the euro presents an additional threat. Meanwhile, consumer spending remains characteristically weak, particularly in the beleaguered south.