You already know that the ECB's flood-the-zone liquidity strategy has helped alleviate bank/sovereign funding concerns, but there's more to the good-news party in Europe than just easy money.

The #1 thing that heals all economic wounds is growth, and Europe is getting some.

Well, actually it's getting less negative growth, which is a start.

Goldman's Huw Pill raised his 2012 Eurozone GDP outlook from -0.8% to -0.4%.

As we have recognised in recent European Weekly Analysts, we now have sufficient evidence of stronger momentum in Euro area activity at the beginning of this year to re-evaluate our macroeconomic projections. The latest PMIs point to modest positive GDP growth in
January.  

We have therefore decided to revise up our forecast for Euro area growth in 2012. We now foresee an area-wide contraction of 0.4%yoy, an upward revision of 0.4ppt from our previous projection of -0.8%yoy. The bulk of this improvement comes from Germany, where we now expect growth of 0.3% in 2012Q1 rather than the contraction of 0.5%qoq that we previously forecast. In the face of
ongoing bank deleveraging, peripheral economies still suffer significant recessions. Intra-Euro area divergence therefore increases. But, at the same time, the overall improvement in Euro area activity improves the outlook elsewhere in Europe, notably in Sweden and the UK.

These two charts/tables tell the story.

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