The troubled eurozone looks poised to exit its long recession with new data yesterday showing that the region’s two heavyweights, Germany and France, are bouncing back to growth.
The German economy, Europe’s biggest, expanded by 0.7 percent in the second quarter of the year, the federal statistics office Destatis calculated.
Growth was driven mainly by domestic demand, with consumer spending and public expenditure both increasing. Investment was also up on the previous quarter, Destatis said in a statement.
Another contributing factor was the catch-up effect following the unusually long and harsh winter, the statisticians said.
Foreign trade similarly gave the data a boost, with exports rising faster than imports.
Compared with the year-earlier period, GDP grew by 0.5 percent in price, seasonally and calendar adjusted terms in the second quarter, Destatis said.
At the same time, France’s economy has jumped out of recession, posting stronger-than-expected 0.5 percent quarter-on-quarter growth in April through June, its best result in two years. France’s return to growth in the second quarter followed 0.2 percent contractions in the final quarter of last year and the first quarter of this year.
The expansion, which beat analyst forecasts, was largely thanks to improved domestic consumption, the national statistics agency INSEE said in a statement.
“This is the largest increase since the first quarter of 2011,” it added.
French Finance Minister Pierre Moscovici welcomed the rebound in GDP, which he said “confirms the end of the recession in the French economy.”
After earlier predicting that the economy would contract by 0.1 percent overall this year, INSEE said it now expects growth of 0.1 percent for this year, in line with government forecasts.
“The eurozone’s two heavyweights bounced back with substantial growth in the second quarter,” Berenberg Bank economist Christian Schulz said.
“Their growth, in combination with the much milder recession in the crisis countries, has dragged the eurozone out of recession since Easter,” he said.
In both Germany and France, growth was driven by domestic demand, while trade was buoyant, but probably broadly neutral for overall growth, the expert said.
However, he added that while investment made a return in Germany, “it remained elusive in France, suggesting that France’s bounce-back does not signal a return to persistent strong growth yet.”
However, the Italian economy, the third-biggest in the eurozone, is still struggling.
Data released late on Tuesday showed that the economy shrank by less than feared in the second quarter, boosting hopes that the end of recession is in sight, but marked the eighth quarterly contraction in a row.
The official Istat data agency said the economy shrank 0.2 percent in the quarter, amid recent indicators that the recession is easing.
The latest shrinkage follows a 0.6 percent contraction in the first three months.
Meanwhile, the Netherlands remains in recession after its economy shrank a further 0.2 percent in the second quarter of this year, dragged down by a big jump in unemployment, the Central Statistic Bureau said yesterday.
The eurozone’s fifth-biggest economy shrank for the fourth quarter in a row, but the contraction is lessening, the bureau said.
The economy slid 0.4 percent in the first quarter of this year. Compared with a year ago, the economy shrank 1.8 percent.