When world leaders gather in
St Petersburg later this week for the G20 summit, one representative group may be forgiven for being a little more optimistic than usual.
For the first time since the G20 was established in response to the global financial crisis, Europe will not be the main focus of attention.
The recent sell-off in emerging market currencies has prompted concern about the health of the so-called BRIC nations. Currencies such as the Indian rupee, Indonesian rupiah and Turkish lira have seen sharp falls in recent months. While the flow of capital out of emerging markets reflects, in part, expectations that the US Federal Reserve may slow its bond-buying programme, it also points to concerns about economic growth in countries such as India, Brazil and Indonesia.
As the focus of the world's attention is slowly tilting towards Asia and South America, Europe's economic woes are
out of the limelight for now. In Brussels there is a certain sense of Schadenfreude – during the height of the euro zone crisis European leaders were forced to stoically accept rebukes from the world's other economic heavyweights as the so-called tiger economies roared ahead. But the detectable European sense of cautious optimism is not unfounded.
In contrast to recent summers, which were punctuated by the eruption of various euro zone crises, this August witnessed the publication of better-than-expected economic data.
In mid-August, figures from the EU's official statistics agency, Eurostat, showed that the euro zone officially exited recession in the second quarter of 2013. The growth of 0.3 per cent was primarily driven by strong figures for the euro zone's two powerhouses, Germany and France, prompting some concern that the divergence between Europe's 'core' and 'peripheral' economies was widening. Nonetheless, the data, following 18 months of economic contraction, offered some signs that an economic recovery could be in the offing.
The GDP figures were underlined by data last week that showed unemployment in the euro zone had stabilised in July after months of steady rises. Similarly, yesterday’s data on European PMI – a key economic indicator that measures economic output – pointed to increased manufacturing activity.
Nonetheless, significant challenges undoubtedly exist for the European Union, which is still one of the world's largest economies. Unemployment remains stubbornly high, with more than 28 million people unemployed across the bloc. Within the euro zone area the problem is more acute, with an unemployment rate of 12.1 per cent. The percentage soars for those under-25, with one in four young people unemployed in the euro zone, and southern countries such as Greece and Spain experiencing a youth unemployment rate of about 60 per cent.