Euro zone growth ‘soft patch’ may drag on into H2: S&P

Euro zone growth ‘soft patch’ may drag on into H2: S&P

London: A second quarter “soft patch" in euro zone growth may well extend into the second half of 2011, ratings agency Standard & Poor’s (S&P) said in a report on euro zone growth prospects published on Wednesday.

Recent data showed “a worrisome picture for growth" and reinforced the “view that the euro zone may be experiencing a more prolonged period of weak economic growth than initially anticipated," S&P said.

On Tuesday, the Purchasing Managers Index (PMI) leading indicator showed output growth slowing sharply with the indices for Germany and France hitting nearly two-year low levels.

The results signaled “a near stagnation of private sector output" in the 17-member single currency zone, S&P said.

S&P also noted that the European Sentiment Indicator fell for the fifth month running in July, with the heaviest drops recorded in Italy and Spain.

The “survey ... suggests that economic weakness is more deeply rooted," the agency said.

“More precisely, it strengthens our opinion that the divergence in growth rates between euro zone countries is widening," it said.