Europe's economy: Recovering or recoiling?

International Monetary Fund (IMF) Managing Director Christine Lagarde reassured the BBC this morning that Europe is on the mend.

The head of the International Monetary Fund, Christine Lagarde, had reassuring words this morning about the state of the European economy.

"We forecast the euro zone to be delivering growth in 2013, which is better than the recession that it has experienced in 2012. So there is an improvement and there is a beginning of recovery," Lagarde told the BBC.

Yet the numbers from European officials this morning tell a different story. Industrial output in the eurozone dropped in November by the most in three years.

"Financial markets have been satisfied with measures that have been taken, but now the economy has to absorb the blow of these measures, so there is a bit of a disconnect," says Julia Coronado, chief economist with the investment bank BNP Paribas.

While Coronado expects the economy in the eurozone to gradually smooth out and even grow by the end of 2013, she says the first half of the year will likely be bumpy.

To hear about the impact of the eurozone slowdown on the U.S., click on the audio player above.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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