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Rebound seen for Europe
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January 22, 2002: 12:16 p.m. ET
Recent economic numbers point to recovery in the 15-nation EU
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LONDON (CNN) - Europe's economy, mired in a prolonged downturn, could be showing signs of recovery, aided by stable inflation and growing consumer demand.
Economic numbers this week have shed some positive light on the 15-nation zone after a dismal performance in 2001, highlighted by news that Germany - Europe's biggest economy -- may have slipped into recession.
In France, consumer spending has risen more than expected, while in Italy, industrial orders have increased and consumer confidence has strengthened.
EU finance ministers meeting in Brussels agreed on Tuesday that the 15-nation group was beginning to rebound.
"We're all aware that we are starting the year 2002 in an economic context characterised by a strong and intense slowdown in both the world economy and the European economy," said Spanish Economy Minister Rodrigo Rato at the opening of the EU meeting.
"We are convinced that unambiguous signs of economic recovery...are already appearing."
On Tuesday, French statistics office INSEE reported that consumers stepped up their spending by 0.4 percent in December, which helped Europe's second largest economy avoid the threat of recession.
Economists say the increased spending -- which was above forecasts of 0.2 percent - may have been due to lower energy prices and a rush to buy goods before the January 1 introduction of euro notes and coins.
"The December data is better than expected. The tendency should carry on in January with discount sales, and good numbers in order books seen in the car industry," Philippe Waechter of Banques Populaires Asset Management, told Reuters.
In Italy, industrial orders rose 0.3 percent in November - an indication that the country's manufacturing sector may have bottomed out after a recent slump.
Industry Minister Antonio Marzano said he expected industrial production to pick up in December after several months in the doldrums. He said retail sales were also looking positive.
Italian consumer confidence also rose in January, according to a survey released on Monday.
"Consumers are considerably more optimistic about the country's general economic situation and employment market prospects," research group ISAE said in a statement accompanying the survey.
Meanwhile, European inflation rose 2.1 percent in December, according to Eurostat, the EU's statistics institute.
The inflation number was slightly higher than expected, but economists said the broader inflation trend remained downward and the data should not stop the European Central Bank from considering another interest rate cut.
"The bank's mandate is to meet its 2-percent inflation goal, not to generate
economic recovery," investment bank Bear Stearns said in its daily bulletin on Tuesday.
"If this is the case, we believe that rates can be cut again because we believe that inflation could fall towards 1 percent. If inflation falls to this level and growth is anemic, the ECB cannot argue that current rates are appropriate."
Despite the upbeat outlook for Europe, Germany's economy is still struggling. The country's gross domestic product grew just 0.6 percent last year, compared to 3-percent expansion in 2000.
The government did not provide figures for the fourth quarter of 2001, but many analysts believe the economy contracted by 0.5 percent in the last quarter - putting Germany into recession.
-- Reuters contributed to this report 
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