Export recovery to slow before long

Recent encouraging news on the euro-zone has prompted us to revise up our 2010 GDP growth forecast from 1.0% to 1.5%. But the recovery is still heavily reliant on German exporters and the outlook for the periphery remains grim. And further evidence that the US economy is losing momentum is adding to concern that the euro-zone’s export recovery may not last long. Accordingly, we still expect GDP growth to slow to around 0.5% next year.