OREANDA-NEWS. April 13, 2015. After a two-year decline, last year finally saw a cautious return to growth in the euro area, with gross domestic product rising by 0.9%. This development is expected to continue in 2015. KfW Research has forecast a plus of 1.3% for the current year.

“The economy in the euro area is gathering momentum. We are finally seeing a return to growth on a broader basis. Private consumption, investments and foreign trade have all made positive contributions,” says Dr J?rg Zeuner, Chief Economist at KfW.

Foreign trade is benefiting from a weaker euro, corporate investments from the stabilisation of the banking sector, and state investments from the slower pace of budget consolidation and the Juncker Plan. However, household consumption will continue to be the greatest linchpin in the euro area in 2015. The fall in unemployment rates and the rise in the working population since the start of 2014 are good news for the economy. Production is on the increase and, at the same time, more people have sufficient disposable income to consume more. The growth in the working population is also having a positive impact on state finances. Indeed, revenues from income tax and social security contributions are higher, while the decline in unemployment is relieving the burden on social security funds. Below the line, there is more money left over for the state – which can be used for productive investments without impairing the solidity of the budget. In turn, these investments generate increased growth.

“I see clear indications that a positive cycle of economic activity is underway,” comments Dr Zeuner. “Of course, this cycle may stagnate if faced with obstacles that force it to slow down. The unclear situation in Greece is a prime example, along with the tense situation in Ukraine and the cooled relations with Russia. Possible turbulence in developing and emerging countries when the US Federal Reserve begins to raise interest rates is also on the radar. With a little bit of luck, the euro area has already picked up enough to resist coming to a standstill once more.”