1

GDP Growth of Eurozone Double-dip recession 2015Q1Q2Q3Q4 Year average Growth rate of GDP 0.4% 0.5% 1.4% 2

How about PMI? 3

Is the Eurozone Recovering? YES 4

But why? the c onsumers are perking up and spending more Main reason - the c onsumers are perking up and spending more Thanks to the sharp fall in energy prices resulting from last year’s collapse in the oil price Whether this stronger recovery can be sustained? 5

There are still reasons to be optimistic (1/3) → Upturn in real wages 1.Labor market recovery → Upturn in real wages → Incur purchasing power 2.Unemployment rate is slowly reducing → Incur purchasing power Can support consumer spending 6

There are still reasons to be optimistic (2/3) 3.Investment will gradually recover as uncertainty fades Lower borrowing costs than in previous years 7

There are still reasons to be optimistic (3/3) 3.Fiscal squeeze will gradually lift Tax revenues will do more of work in reducing budget deficits Government spending growth should accelerate modestly 4.Thanks to the QE program, exporters are also being helped by the sharp depreciation in the euro 8

However, there are still risks 1.ECB’s QE program will continue until at least September But capital markets play a much smaller part in the provision of finance in the euro area than in the US, which suggests that QE is likely to be less effective than in America 2.There is still a risk that a messy Greek default or exit could throw financial markets into turmoil 3.Euro area remains weighed down by heavy public and private debt 4.The situation remains heterogeneous in different countries 9

Euro area Euro-area Member States Non-euro area Member States Member States with an opt-out BelgiumBulgariaDenmark GermanyCzech RepublicUnited Kingdom IrelandHungary GreecePoland SpainRomania FranceSweden ItalyCroatia Cyprus Luxembourg Malta Netherlands Austria Portugal Slovenia Slovakia Finland Estonia Latvia Lithuania The 'euro area' is the official term for the group of EU Member States that have adopted the euro as their currency. Euro-area Member States share the common currency and the single monetary policy conducted by the European Central Bank % 1.8% 16%

Germany v.s. Italy QoQ YoY

Conclusion The euro area may at last be achieving a recovery worthy of its name, but it is too early to declare victory. 12

Turkey v.s. EU-GDP Growth Rate

Turkey v.s. EU-Unemployment Rate