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Euro zone GDP: Brace yourself

Gary Waters | Ikon Images | Getty Images

Complacency about the state of the euro zone's economy could get a serious shaking Thursday, with the latest growth figures not expected to paint a pretty picture.

The gross domestic product figures for the second quarter of 2014, following on from a paltry 0.2 percent increase in the first three months of the year, are unlikely to banish the looming specter of deflation and economic stagnation. Between April and June, the single currency region's economy is expected to grow by just 0.1 percent from the previous quarter – or 0.4 percent from the same time in 2013. By contrast, the U.S. announced last month that its economy grew 4 percent on an annual basis.

Germany and France focus for concern

Most importantly, Germany, long the engine room of Europe, and the region's largest economy, is expected to show faltering or even declining growth. This can partly be accounted for by an unusually strong first quarter, powered by unseasonably high construction figures. Still, German investors are increasingly sceptical about the country's economic potential, according to the ZEW figures released on Tuesday.

Neighboring France is also unlikely to provide much of a fillip to growth, as pressure grows on its government to enact economic reforms more quickly.

"Growth in the euro area is perilously low, and vulnerable to even slight setbacks in sentiment," according to Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.

"At the current rate, growth is far too low and uncertain to make a meaningful difference to a still high unemployment rate and too high debt levels."

Read MoreEuro zone's surprise growth boosts recovery hopes

More clouds on the horizon

The diverging performance of the peripheral euro zone economies is also raising eyebrows. While Spain's return to growth has been heralded, Italy has slipped back into recession. Like France, Italy appears to not be enacting promised structural reforms as quickly as hoped.

The second-quarter figures are unlikely to show the effects of the Asset Quality Review of the region's banks and the sanctions against Russia, so there are likely to be clouds on the horizon for a while. This makes the European Central Bank's forecast of 1 percent growth this year look optimistic, and any change downward of this forecast may increase the pressure on the bank to start a money printing program, like the Fed and Bank of England before it.

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