France, Germany Fend Off Recession

Modest Growth Is Latest Sign of Global Comeback

By Anthony Faiola
Washington Post Staff Writer
Friday, August 14, 2009

Fresh signs of a nascent economic recovery came from hard-hit Europe on Thursday, with Germany and France unexpectedly becoming the first major industrialized nations to officially pull out of the global recession.

Though their recoveries were modest by virtually any standard and may yet stall in the months ahead, the surprising bounce back to growth in Europe's largest economies comes on the heels of steadily rising economic optimism across the globe.

Analysts are pointing to improving indicators in the United States, China and even Japan, the world's second-largest economy, which some observers predict is set to announce its own return to growth in the coming days. Though a host of other European economies -- including Britain, Italy and Spain -- are still mired in one of the worst recessions in generations, contractions are moderating even in many of those nations, an indication that they too may be close to rebounding. It underscores, analysts say, how ramped-up government stimulus spending around the globe appears to be having at least some of its desired effects.

A significant rebound in the global economy could both help and hurt the United States. Growth abroad could fuel an eagerly anticipated uptick in U.S. exports, boosting the manufacturing sector and potentially channeling more investment into U.S. soil. Yet too quick an increase in global demand could spark a painful price spike for commodities such as oil, driving up inflation before the United States and other nations have fully emerged from recession.

(More here.)