BRUSSELS: A weak eurozone recovery slowed to a ‘snail’s pace’ in the third quarter, with powerhouse Germany off its stride and France hit by a surprise contraction, official data showed yesterday.
The 17-nation eurozone economy grew just 0.1 percent in the three months to September after a gain of 0.3 percent in the previous quarter, the Eurostat statistics agency said.
Germany, Europe’s largest economy, eked out growth of 0.3 percent, down from 0.7 percent in the second quarter, while France slipped back, its economy shrinking 0.1 percent after a gain of 0.5 percent. The eurozone emerged from a deep and record 18-month recession in the second quarter with growth of 0.3 percent and it had been expected to maintain that pace initially.
However, recent data has fallen short, with unemployment especially a cause for concern at a stubborn all-time high of 12.2 percent, forcing analysts to steadily downgrade their third quarter growth estimates to 0.1 percent.
Martin van Vliet of Global Economics ING said the report showed the “recovery continued in the third quarter but at a snail’s pace.”
The cause appears to be slowing exports, which van Vliet blamed on a stronger euro currency, while domestic demand fails to make up the difference.
“With weak housing markets, still-tight credit conditions and ongoing fiscal austerity still keeping spending ... subdued, domestic demand simply couldn’t offset this,” he said.
Eurostat gave no details of the figures but in Berlin, its Destatis counterpart said the German slowdown reflected a lacklustre export performance.
Just the day after Brussels formally put Germany on notice because of its over-reliance on exports for growth, Destatis said growth was driven “exclusively from within Germany.”
Analysts said the German figures disappointed but were not cause for immediate concern.
“While the overall level of growth may be disappointing, the mix of components looks strong,” said Berenberg Bank economist Christian Schulz. “The German economy remains the stronghold of the eurozone,” said ING DiBa economist Carsten Brzeski, highlighting a “positive mix of record high employment, wage increases and strong external demand for German products.”
Howard Archer of IHS Global Insight said the report showed the eurozone “just about managing to keep growing, it is struggling to develop recovery momentum.”
“It was particularly disappointing to see France suffer a renewed dip ... which highlights concern about its underlying competitiveness,” Archer said.
Archer said growth should “edge higher in the fourth quarter but we suspect that recovery will remain gradual and vulnerable in the face of still significant headwinds.” AFP
