Germany and France unexpectedly emerged from recession on Thursday while the 16-nation eurozone economy shrank by just 0.1 per cent in the second quarter in new signs that a recovery is taking shape. A day after the Federal Reserve said the recession-hit US economy was stabilising, official initial estimates showed that Germany and France both achieved growth of 0.3 per cent in the second quarter of 2009.

The news was particularly welcome for German chancellor Angela Merkel ahead of polls next month as Europe’s biggest economy had not seen positive growth since the first quarter of 2008. Analysts had forecast a 0.2 per cent drop. “We have come back to positive growth,” said French finance minister Christine Lagarde, welcoming what she described as “extremely surprising” figures.