Eurozone鈥檚 GDP growth loses pace
Print Edition
EUROPE’S economy failed to gain any momentum in the first quarter, reinforcing expectations that the European Central Bank will soon deploy fresh stimulus measures to shore up the tepid recovery.
The economy of the 18 countries that share the euro saw output grow by only 0.2 percent in the first quarter from the previous three-month period, the European Union statistics office said yesterday.
That marked the fourth straight quarter of expansion. But the rise was below economists’ hopes for 0.4 percent.
The slack eurozone outperformed the United States, where stormy and cold winter weather meant there was no growth at all, according to Eurostat.
A large chunk of the blame can be placed on a flat performance in France, Europe’s second-largest economy behind Germany. Between them, the two make up roughly half of the eurozone economy. France has lagged in reducing worker protection and cutting labor costs for business — steps that have benefitted other eurozone economies.
A dismal 1.4 percent contraction in the Netherlands and a 0.1 percent decline in Italy did not help, either. Elsewhere, Portugal’s economy slipped even as the country prepares to leave its bailout aid program tomorrow. Greece, its economy ravaged by excess debt and brutal austerity, saw its output decline in annual terms by 1.1 percent. Greece doesn’t provide quarter figures but the annual rate of contraction has been diminishing for a year now. There are hopes now that the country at the forefront of Europe’s debt crisis will soon be recording some growth.
Without a stellar 0.8 percent rise in Germany and a solid 0.4 percent improvement in Spain, there may not even have been any growth in the eurozone.
Tom Rogers, senior economic adviser to the EY eurozone forecast, said the numbers “should act as a wake-up call for any eurozone policy-makers tempted towards complacency about the road to recovery.”
“Stagnating output in Italy and France, two of the four largest economies, is in large part a result of deteriorating cost-competitiveness, while Germany and Spain continue to reap rewards from reform implemented,” he added.
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