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December 4, 2009

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Eurozone in slow climb out of recession

ECONOMIC figures released yesterday provided little evidence that the 16 countries that share the euro are enjoying a strong recovery from recession.

Eurostat, the EU's statistics office, confirmed that the eurozone's economy grew by 0.4 percent in the July-September quarter from the previous three-month period - unrevised from its previous estimate - and that retail sales were flat in October from the previous month.

Eurostat said Greece and Spain remained the only two eurozone countries in recession.

Germany, the currency bloc's biggest economy, posted quarterly growth of 0.7 percent.

The third-quarter rise was the first in six quarters. Though the eurozone's banks were not at the epicenter of the financial crisis that triggered the global economic downturn, the region suffered as demand for its high-value products fell.

The EU as a whole, which includes non-euro members such as Britain and Sweden, grew by 0.3 percent, just above the previous estimate of 0.2 percent, while retail sales rose 0.3 percent in October from the previous month. In addition to Greece and Spain, Estonia, Cyprus, Hungary, Romania and Britain continued to see output shrink during the quarter.

The severity of the recession is evident in the annual comparisons - despite the modest third-quarter growth, Eurostat said eurozone output was 4.1 percent lower than the year before while the EU's GDP was down 4.3 percent.


However, both those figures were improvements on the 4.8 percent and 5 percent contractions recorded in the second quarter.

Despite the modest third-quarter improvement, growth is not expected to return to pre-crisis levels for a while yet, meaning the output lost during the recession will take years to be made up.

Yesterday's figures come ahead of the latest policy statement after the meeting of the Governing Council of the European Central Bank.

The European Central Bank yesterday left its main interest rate unchanged at a historical low of 1 percent, as widely predicted by markets.


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