Eurozone on Edge of Exiting Recession

The eurozone economy is on the edge of exiting its longest recession in history as analysts forecast fragile growth data for the second quarter this year.

According to market consensus, the eurozone is expected to record just 0.2% economic growth, which is just enough to pull the bloc out of recession.

Technically, a recession is when a country's gross domestic product (GDP) records two consecutive quarters of negative economic growth, which usually lasts between six to 18 months. Furthermore, market stimulating measures are usually applied, such as a slash interest rates, in order to kickstart the economy.

In the first quarter this year, the eurozone posted a 0.2% decline in economic growth.

Mixed Picture

As usual, the overall picture for economic growth is expected to be mixed as countries such as Greece and Spain are still tussling with mass unemployment and strict austerity measures.

Portugal is also a major concern for analysts who say political instability is threatening to unwind a lot of key steps forward in getting its economy back on track.

"A challenging macroeconomic outlook and the recent political crisis make the Portuguese government's plans to return to the market even more distant," said Hamish Pepper and Moyeen Islam, analysts at Barclays Capital.

"Unless the outlook surprises positively, Portugal would require additional official funds. More importantly, public debt relief would also be needed to set public debt dynamics on a downward path.

"Some core countries are likely to press for PSI before OSI takes place, yet we believe contagion risks to Spain and Italy will weigh heavily against that option."

Growth Areas

Germany is predicted to show signs of faster economic growth in the second quarter. The economy is tipped to be gradually building momentum after suffering a contraction in late 2012.

Analysts say that while growth is unlikely to exceed record levels for any quarter until 2015, Europe's largest economy will start consistently posting modest data for the next year.

Eurozone industrial production is also expected to show some bright spots as it rose in April and June. Official data has also shown that construction output lifted after a weak first quarter.