THE EURO ZONE’S economic recovery almost ground to a halt in the final quarter of last year, with France the only one of the currency area’s four big economies to post any growth.
The 16-country euro zone grew just 0.1 per cent in the last three months of 2009, official figures showed yesterday, sparking concern that Europe could slip back into recession as government stimulus measures such as car scrappage schemes peter out.
The German Federal Statistics Office said yesterday that GDP in the fourth quarter was unchanged from the third quarter, when it rose 0.7 per cent. Economists had expected a gain of 0.3 per cent.
The export-dependent German economy was hit hard by last year’s global recession: a fall-off in demand for its cars and machines resulted in an unprecedented 5 per cent contraction in the economy, the worst performance in Germany’s post-war history.
An unusually harsh winter has slowed economic performance in 2010 to date. Though yesterday’s data came as a surprise to some analysts, it hasn’t dampened their expectations for 2010.
“The fourth-quarter figures are disappointing, but it doesn’t mean the end of the recovery,” said Commerzbank analyst Simon Junker to Reuters. He predicts first quarter 2010 growth of 0.5 per cent, and stronger performances to follow.
While the Bundesbank forecasts growth of 1.6 per cent in Germany this year, following last year’s record slump, some optimistic analysts have gone so far as to suggest 2 per cent growth.
While France saw growth of 0.6 per cent, supported by healthy consumer spending, the other large economies, Italy and Spain, contracted by 0.2 per cent and 0.1 per cent respectively. Italy went into reverse after coming out of recession.
Recession continued in Ireland, Greece and Cyprus, while Portugal stagnated, although Austria and the Netherlands expanded.
“A rise of 0.6 per cent means it was twice as good as spring and three times better than the autumn,” French finance minister Christine Lagarde told French radio after the statistics were released.
French household consumption was an important driver of growth, rising 0.9 per cent after increasing just 0.1 per cent in the third quarter.
Analysts sounded a note of caution because recent data for France showed this was partly due to strong car sales underpinned by a scrappage scheme. The scheme is being phased out this year and carmakers such as Renault have warned of an uncertain outlook for 2010. – (Additional reporting, Guardianservice)
