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PARIS, Dec 24 (Reuters): Europe's economy is beginning to motor as 2005 comes to an end, but as 2006 dawns people may remember this year too started with a spark followed by ignition failure.
Stock markets are higher than they've been for 3-1/2 years, governments are raising national GDP forecasts and economists are shutting down their computer spreadsheets for Christmas in the belief that next year will be a better one for growth.
"The region now looks well placed to experience a decent business cycle upswing next year, breaking it out of the rut that it has been in since 2000," JP Morgan economist David Mackie said in an end-of-year note to clients.
The European Commission this week said its prediction of 1.9 per cent expansion in euro zone gross domestic product next year could even be topped -- by accident more than design -- because of a recent acceleration in world growth and demand.
While unspectacular beside Chinese growth rates of closer to 10 per cent or US growth of double the European pace, that is a notable improvement from this year's estimated growth aggregate of 1.3 per cent for the 12 nations that use the euro.
Business confidence has been rising, as monthly surveys from Germany, Italy and Belgium showed this week. But industry output is still patchy, and households are reluctant to spend at a time of stubbornly high unemployment.
The euro's slide of a more than 10 per cent versus the dollar this year eased the travails of exporters who have cut jobs to keep costs down in a cut-throat battle on world markets where China's presence is felt more with each day.
But France, which has fared relatively better than Germany and Italy overall in the downturn that followed the 2000 dot-com blowout, showed how precarious the climate remains, publishing a survey Friday that said confidence there dipped in December.
Output in manufacturing and the much larger services sector has been picking up nonetheless, according to monthly surveys of corporate purchasing managers that are considered to be a good up-to-the-minute gauge of what is happening.
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