The euro zone economy barely contracted in the second quarter, data showed today, thanks to a surprise return to growth in Germany and France which indicated the single currency area could grow again in the third quarter.
Gross domestic product in the 16 countries sharing the euro contracted only 0.1 per cent in April-June against the first three months of 2009, when the quarterly fall was 2.5 per cent, the European Union's statistics office Eurostat said.
Economists had initially expected a 0.5 per cent fall, but revised up their forecasts to -0.1 per cent after Germany and France, the euro zone's two biggest economies, surprised markets with quarterly growth of 0.3 per cent, rather than an expected contraction of the same size.
Year-on-year, euro zone GDP fell 4.6 per cent, rather than the initial 5.1 per cent expected by economists which they later revised up to -4.7 per cent, and an improvement from the 4.9 per cent year-on-year drop in the first quarter.
The Eurostat GDP estimate does not contain a more detailed breakdown of the data. “The overall story is that the eurozone economy has been pulled out of recession by a combination of the revival in the global economy and government fiscal stimulus,” said Nick Kounis, economist at Fortis Bank.
“We have seen a marked improvement in export demand, with net exports probably making a positive contribution to growth. Meanwhile, government car buying incentive schemes across the eurozone drove consumer spending higher,” he said.
“Public spending - both consumption and investment - probably also supported GDP,” he said.
Apart from France and Germany also Portugal and Greece saw 0.3 percent quarterly growth in the second quarter, but Italy, the Netherlands, Belgium and Austria all stayed in the red.
“This is definitely good news which should display a welcome impact also on next quarters' figures,” UniCredit economist Aurelio Maccario said of the second quarter euro zone GDP results.
“We now expect the euro area to resume positive growth already in the current quarter, with probably a slight acceleration at the end of the year,” he said.
The economy of the United States, the world's largest economy shrank 0.3 per cent in the second quarter against the previous three months and 3.9 per cent year-on-year.
Reuters