The eurozone economy is expected to recover steadily in the first quarter of this year with growth of 0.4 per cent pulled by industrial production, but then flag slightly, three top forecasting bodies say.
Threats to this outlook came from a slowing of demand from emerging economies and tension over Ukraine.
But this improvement will have scant effect on high eurozone unemployment, largely because consumers' buying power has been crimped by austerity measures in some eurozone countries and by the effects of unemployment.
Consumer spending would remain sluggish, the German Ifo, French Insee and Italian Istat institutes said.
But amid concerns that deflation may be stalking the eurozone, the institutes said that inflation was set to pick up slightly.
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"Although improving, the pace of the recovery will remain insufficient to significantly reduce the unemployment rate," they said in a joint report.
"This is expected to stay at record highs in the short term and to decrease only moderately going forward."
Output in the 18-member eurozone could grow at a rate of 0.4 per cent in the first three months of the year.
That would be twice the rate of 0.2 per cent in the previous quarter, after 0.1 per cent in the quarter before that.
Industrial output was set to expand by about 0.4 per cent in the next three quarters, they said, except for output in the construction sector where investment would remain low.
However, the downturn in construction had ended.
The recovery would be helped by a "progressive improvement of domestic demand" and a slight boost from exports and activities abroad.
Private investment would also continue to recover from sharp cutbacks in response to the financial crisis.
But this outlook for recovery was clouded by "weaker external demand in emerging economies, especially in Asia, and an escalation of tensions in Eastern Europe".
The tension over Ukraine could also lead to "a sharp rise in European gas prices and weigh on households' and firms' expenditure," the institutes said.
Growth in the third and fourth quarters would ease to 0.3 per cent.
But on the basis that the price of oil remained steady at $US107 per barrel and that the exchange rate of the euro fluctuates around $US1.38, inflation would rise slightly in the first half of the year while remaining well below 2.0 per cent, the target ceiling for the European Central Bank.
