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Eurozone emerges from recession

2009-11-13 06:41:41

The eurozone economy has emerged from recession after growing between July and September, figures have shown.

The 16 nations that use the euro collectively grew 0.4%, after shrinking by 0.2% between April and June.

The French and German economies both grew for a second consecutive quarter, confirming the eurozone's two largest economies are out of recession.

However, both France and Germany grew by less than expected, a sign of how tentative signs of recovery remain.

The European Union as a whole - 27 nations including the UK and Sweden - also emerged from recession, growing 0.2% in the third quarter.

Germany's economy grew by 0.7% in the quarter, while France grew by 0.3%. Both economies and Japan ended year-long contractions in the second quarter of the year, while the US has since joined them after its economy grew in the third-quarter.

However, the UK remains in recession, having contracted by 0.4% between July and September.

The UK, Europe's second-largest economy, has now contracted for six consecutive quarters, the first time this has happened since quarterly figures were first recorded in 1955.

Faster recovery

ANALYSIS

Nigel Cassidy, business reporter, Brussels Every recovery is different and the slow crawl out of recession in the eurozone countries is no exception. This time it's continental European exporters who are responsible for most of the new growth - and that in spite of an uncomfortably strong euro, without which firms would have undoubtedly sold even more goods to faster-growing markets overseas. In the main, consumers have not changed their behaviour - retail sales have risen slightly but unemployment is still rising, and will do for many months to come. Economists are quick to point out that a great deal of the growth is thanks to economic stimulus packages which are bolstering European economies. Germany alone is currently lending 85bn euros of its taxpayers' money. Nobody can even guess what will happen to growth when national governments stop pumping credit into the system - as the European Commission is urging them to do within two years.

Economists had expected Germany to grow by 0.8% in the third quarter, and France to grow by double what it actually did in the third quarter - predicting growth of 0.6%.

Germany's Desatis statistics office also revised upwards its estimate for growth in the second quarter, to 0.4% from 0.3%.

Though the data on Friday was weaker than expected, few analysts had even predicted at the start of the year Germany and France would start to recover so soon.

"The German economy has emerged from the deep recession earlier and faster than many had thought," ING economist Carsten Brzeski said.

French Finance Minister Christine Lagarde told Europe 1 radio that while the country's economy will have contracted during 2009 overall, it would enter next year "with elan".

France and Germany may have been less hard hit than the UK by the global economic slowdown because their financial sectors, which were at the heart of the crisis, account for a smaller proportion of their economies.

Stronger exports and consumer spending, as well as government stimulus packages, have contributed to the growth in the eurozone's largest economies.

The data released on Friday showed that Italy, Austria and Slovakia had also emerged from recession in the third quarter.

However, Spain's troubled economy contracted further in the quarter.