Eurozone shows recovery signs
The eurozone, caught in a spiral of recession, may finally be recovering going by the latest economic indicators of two of its key member-countries, Germany and France.
Germany has tiptoed out of its recent shallow recession in the third quarter as strong foreign demand for German-made goods enabled the economy to grow by a modest 0.2%.
According to data released on Thursday, the Federal Statistics Office calculated that German gross domestic product (GDP) grew by 0.2% in the period July to September from the preceding three months, boosted by strong export growth.
The release coincided with the publication of separate GDP data for France, which showed that French GDP grew between 0.3 and 0.4% in the third quarter.
Survey
Taken together, the figures for the eurozone’s two economic heavyweights appear to confirm that the longed-for recovery in the 12-country region is finally underway.
The European Central Bank in its regular quarterly survey of professional economic forecasters found that while experts were expecting area-wide growth to come out at only 0.5% for the whole of 2003, the recovery would gather momentum both next year and in 2005 when growth would reach 1.7% and 2.3% respectively.
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“The rise in economic activity in the third quarter of 2003 was characterised by a strong rise in exports, while imports declined” Statistics office, |
In Germany, the modest quarterly expansion of GDP was in line with economists’ expectations and effectively means that Germany has managed to shrug off the shallow recession it slipped into at the end of last year.
Recession
Recession is technically defined as two consecutive quarters of negative growth and German stagnated or even contracted fractionally in the fourth quarter of 2002 and contracted by 0.2% in both the first and second quarters of 2003.
Despite the strength of the euro, which makes German-made goods less competitive than rival foreign products, it was Germany’s export strength that is steering the economy back to modest growth, the data showed.
“The rise in economic activity in the third quarter of 2003 was characterised by a strong rise in exports, while imports declined, leading to a sharp rise in the German trade surplus,” the statistics office explained.
Nevertheless, economists believe that with domestic demand likely to remain sluggish at best owing to the high level of unemployment in Germany, the economy is only expected to notch up zero growth for the whole of 2003.