First quarterly output rise cheers eurozone
Print Edition
Minube, a travel startup on the outskirts of Madrid, is doing something that many Spanish companies haven’t thought about for years: It’s hiring.
The company, which sells bookings as it helps travelers share their experiences using social media, has nearly doubled its headcount from 17 at the end of last year to 30. Business is booming as customers come in from across Europe — including some places hardest hit by Europe’s economic crisis.
“We’re finally starting to see a bigger growth curve in Spain, and the strong growth in Italy has been a surprise,” Minube’s co-founder, Pedro Jareno, said. “The improvements we are starting to see in the market are constant.”
That brighter — or less gloomy — backdrop was evident in figures yesterday, which showed that the longest-ever recession to afflict the eurozone came to an end in the second quarter of this year.
First quarterly growth
Eurostat, the European Union’s statistics office, said the 17 EU countries that use the euro saw their collective economic output increase by 0.3 percent in the April-June period from the previous quarter.
That’s the first quarterly growth since the eurozone slipped into recession in the last three months of 2011. The ensuing recession of six quarters was the longest since the euro currency was launched in 1999.
The improvement offset the previous quarter’s equivalent fall and was slightly better than the 0.2 percent anticipated in the markets. Growth, however anemic, had been predicted by many economists following an easing in market concerns over Europe’s debt crisis over the past year and record-low interest rates from the European Central Bank.
The eurozone’s growth, which translates to an annual rate of around 1.3 percent, is still below the 1.8 percent the US enjoyed during the second quarter.
The figures will be greeted with a sigh of relief by Europe’s policymakers, who have spent nearly four years grappling with a debt crisis that has threatened the very future of the euro. But they were not ready to declare victory, aware that this is only the start of what is expected to be a slow and uneven recovery.
“This slightly more positive data is welcome — but there is no room for any complacency whatsoever,” Olli Rehn, the EU’s top monetary official, said in his blog after the release of the figures. “I hope there will be no premature, self-congratulatory statements suggesting ‘the crisis is over.’”
The improvement was largely due to solid growth of 0.7 percent in Germany and a surprisingly strong 0.5 percent rebound in France following two quarters of negative growth.
Aside from Europe’s top-two economies, there were signs of stabilization elsewhere, notably in Portugal, which expanded by a surprising 1.1 percent. Spain and Italy saw the pace of their economic contractions slow.
Greece on the mend
There was even evidence that the recession in Greece, the country at the heart of Europe’s debt crisis, is easing, too. Eurostat doesn’t publish quarterly figures for Greece. It only has annual comparisons and they showed that the year-on-year contraction eased to 4.6 percent in the second quarter from 5.6 percent in the first.
The recovery in Europe, the world’s largest trading bloc, is expected to cause an increase in global trade levels later this year as big exporters like Germany gather pace and Europeans buy more products from companies in the US, Japan and elsewhere.
Despite the cautious optimism, analysts said the eurozone still has a long way to go before it can say it has proved the skeptics wrong. Europe’s indebted governments still face years of spending cuts and tax rises and many, notably Greece and Spain, are weighed down by record-high unemployment of more than 25 percent. A full recovery across the eurozone is not expected before 2015.
But Jonathan Loynes, chief European economist at Capital Economics, said: “The recession may be over, but the debt crisis is decidedly not.”
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