There have been welcome signs that the pace of decline in the region’s economy has started to ease in recent weeks. But we think a recovery remains some way off. First, while consumer and business confidence has edged up in some countries, it remains perilously weak. Second, a recovery in industry remains contingent on a sustained recovery in the euro-zone, which is unlikely much before the second half of next year. Finally, and most importantly, while financial markets have rallied from February’s lows this has owed more to a rise in global risk appetite than an improvement in macroeconomic fundamentals. If the nascent recovery in global markets runs out of steam, further capital outflows are likely. Accordingly, we are sticking to our below consensus GDP forecast for this year and next.