German GDP points to better times ahead in the eurozone...

In a week of generally bad financial and economics news stories there was a glimmer of hope on Friday with the release of better than expected data with a pick-up in German economic output resulting in a 1% rise in gross domestic product (GDP) across the eurozone. However, the detailed numbers showed a sharp contrast between the robust data from Germany and France and the continued weakness in the so called "Club-Med countries" like Spain, Italy and Greece. This prompted an excellent story in the weekend FT with the author (Stanley Pignal) pointing to the emergence of a divided eurozone with the healthy core countries and the much weaker southern zone in dire trouble. It seems that while the likes of Germany have enjoyed a surge in exports resulting from the depreciation in the euro the same cannot be said for countries like Spain who predominantly trade within the eurozone. Against this background the next few months could see a period of further pressures on eurozone financial markets as investors remain concerned about the financial state of many of the weaker economies.