Eurozone economy edges up
By Pan Pylas |
June 5, 2010, Saturday
|
Print Edition
Print Edition
THE economy of the 16 countries that use the euro grew by 0.2 percent during the first quarter compared with the previous three-month period, despite another big drop in output in debt-laden Greece, official figures showed yesterday.
The first-quarter data from the EU's statistics agency Eurostat were unrevised from the previous prediction, with Germany growing by 0.2 percent and France by 0.1 percent.
However, Eurostat now says that the eurozone economy actually grew by 0.1 percent in the last quarter of 2009, against its previous forecast of zero growth.
That means the eurozone has now grown for three straight quarters following the deepest and longest recession in decades. The growth has mainly come from a build-up in stock levels following the recession, while the bad weather seen in large parts of the eurozone in the first three months of the year kept a lid on consumer spending.
Despite an increase in exports as a result of the pickup in global trade and the fall in the value of the euro, imports rose by even more, meaning that net trade acted as a drag on growth.
The tepid recovery in the eurozone contrasts with that of the United States and Japan, which saw output rise by 0.8 percent and 1.2 percent in the first quarter respectively, according to Eurostat.
Analysts remain skeptical that the eurozone will be able to pick up at the rate of its main economic competitors, not least because of the debt problems afflicting a number of countries.
"Household spending and investment both fell and with growing signs that the announced fiscal austerity measures are beginning to hit business and consumer confidence, a near term pickup seems fairly unlikely," said Ben May, European economist at Capital Economics.
An unemployment rate of around 10 percent in the eurozone is hardly conducive to a marked improvement either.
"There is concern over the ability of exports alone to drive growth and stimulate employment in the longer term," said Owen James, an economist at the Center for Economic and Business Research.
The first-quarter data from the EU's statistics agency Eurostat were unrevised from the previous prediction, with Germany growing by 0.2 percent and France by 0.1 percent.
However, Eurostat now says that the eurozone economy actually grew by 0.1 percent in the last quarter of 2009, against its previous forecast of zero growth.
That means the eurozone has now grown for three straight quarters following the deepest and longest recession in decades. The growth has mainly come from a build-up in stock levels following the recession, while the bad weather seen in large parts of the eurozone in the first three months of the year kept a lid on consumer spending.
Despite an increase in exports as a result of the pickup in global trade and the fall in the value of the euro, imports rose by even more, meaning that net trade acted as a drag on growth.
The tepid recovery in the eurozone contrasts with that of the United States and Japan, which saw output rise by 0.8 percent and 1.2 percent in the first quarter respectively, according to Eurostat.
Analysts remain skeptical that the eurozone will be able to pick up at the rate of its main economic competitors, not least because of the debt problems afflicting a number of countries.
"Household spending and investment both fell and with growing signs that the announced fiscal austerity measures are beginning to hit business and consumer confidence, a near term pickup seems fairly unlikely," said Ben May, European economist at Capital Economics.
An unemployment rate of around 10 percent in the eurozone is hardly conducive to a marked improvement either.
"There is concern over the ability of exports alone to drive growth and stimulate employment in the longer term," said Owen James, an economist at the Center for Economic and Business Research.
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