Core's resilience unlikely to last

Last week’s euro-zone economic data brought some reasons for hope. While GDP in the region as a whole fell for the second quarter running in Q3, both Germany and France posted modest expansions, perhaps suggesting that the two might yet drag the rest of the region out of recession. But the outlook for the core economies is pretty gloomy. Their exports are likely to suffer more from the downturn in demand from the periphery in time. Meanwhile, consumer spending will be hit by the rise in unemployment that has recently begun in Germany and further austerity measures in France. Accordingly, we still see the euro-zone recession deepening next year.