Eurozone Narrowly Escapes Recession
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On the back of strong export growth in Germany, the 17-nation eurozone currency bloc has managed to narrowly avoid recession in the first three months of the year.
The European Union statistics agency, Eurostat, announced today that growth in the eurozone was zero percent in the first quarter of 2012, helped by Germany’s better than expected economic performance.
Expanding at 0.5 percent for the same period, Germany helped the euro area avoid its second recession in three years, cementing hopes that Europe’s largest economy can underpin the eurozone.
On the back of strong export growth in Germany, the 17-nation eurozone currency bloc has managed to narrowly avoid recession in the first three months of the year.
The European Union statistics agency, Eurostat, announced today that growth in the eurozone was zero percent in the first quarter of 2012, helped by Germany’s better than expected economic performance.
Expanding at 0.5 percent for the same period, Germany helped the euro area avoid its second recession in three years, cementing hopes that Europe’s largest economy can underpin the eurozone.
Bouncing back from a contraction of 0.2 percent in the fourth quarter, preliminary data from Eurostat also showed German growth compared with the same quarter a year earlier accelerated to 1.7 percent from 1.5 percent in the fourth quarter.
Analysts praised Germany’s “Teflon economy”, which has so far evaded the fate of eurozone peers, not only due to its export performance but also helped by healthy domestic consumption in the country of 80 million people.
In a note, Joerg Kraemer, an economist at Commerzbank, wrote:
[quote] This is a very strong comeback. The decline in the fourth quarter was not the start of a recession but just an economic dip. [/quote]
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According to the New York Times, Germany has benefitted from the European Central Bank’s benchmark interest rate of percent, which is set with the overall eurozone economy but is probably too low for the German economy – fuelling inflation that is already above the official target of 2 percent.
Despite the relative economic success achieved by Germany, huge disparities in the economic performance within the eurozone remain.
Growth in France came to a standstill, while 7 states (Ireland, Greece, Spain, Italy, Cyprus, the Netherlands, Portugal and Slovenia) are in recession.
Speaking to Bloomberg, Nick Kounis, head of macroeconomic research at ABN Amro said:
[quote] Germany is holding up the rest of the eurozone. While it will remain the outperformer, I doubt this will happen again in the second quarter. [/quote]
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Related Statistics: Euro Area GDP
Related Statistics: Germany GDP
