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Recession ends across Europe
November 13, 2009
Europe's deepest recession since World War II officially ended on Friday when the world's biggest single trading bloc joined Japan and the United States in returning to growth.
Both the 16-nation eurozone and the 27-nation European Union as a whole, home to half a billion people, posted growth -- of 0.4 percent in the mainstay single currency area and 0.2 for the whole EU in the third quarter.
But after five quarters running of economic retreat, the fact that key pillar Britain still lags behind its main trading partners -- with a 0.4 percent contraction -- underlined the fragility of recovery.
Analysts said that the improvement is unlikely to be robust enough to change broad economic policy lines.
The question for the political leaders is whether and when the withdrawal of massive state support for economic rebuilding works can be withdrawn without derailing the recovery which is struggling with high and rising unemployment.
Growth of 0.7 percent in Germany, Europe's most powerful economy, and 0.3 percent in France, lay behind the improvement across the eurozone.
The eurozone economy had shrunk by 0.2 percent between April and June after a record collapse of 2.5 percent in the first three months of the year.
However, Britain's results and Spain, with a 0.3 percent decline, contributed to the figures released by the EU's data agency Eurostat being pulled down for the bloc as a whole.
The European figures compare with a 0.9 percent improvement in third-quarter economic output in the United States.
Japan already exited from recession in the second quarter with 0.6 percent growth.
Chief IHS Global Insight economist Howard Archer poured some cold water on the news when he said the the emergence into daylight came "at a trot rather than a canter."
In the same period of 2008, the eurozone economy shrank by 4.1 percent with the EU as a whole trailing even further behind.
Cautioning that "consumer spending likely saw little or no growth," Archer also warned that the recovery "could well lose momentum for a time in 2010 before growth starts to gradually pick up again."
But he tipped overall eurozone growth of one percent in 2010.
Clemente De Lucia of BNP-Paribas said the rebound was due mainly to the industrial sector and warned that the recovery "might fade next year" once the impact of the 'cash-for-clunkers' scheme to boost new car sales and other incentive measures are fully withdrawn.
He also pointed to high unemployment, running at more than 22 million at the last count across the EU, acting as a brake on expansion for some time yet -- as well as a weak dollar.
While exchange rates are boosting exports from global competitors, nervous consumers meanwhile fear a double-whammy of rising repayments on loans and rising prices when the drip-feed of state economic support is eventually scaled back.
The global credit crisis forced EU governments to plough trillions of dollars into faltering banking systems and other direct stimulus programmes in a bid to drive the economy forward.
Brussels released figures drawing on national input from 17 EU nations, with 10 showing growth and seven still contracting.
France and Germany had already returned to growth of 0.3 percent each between April and June.
Among the remaining leading nations, Italy experienced third-quarter growth of 0.6 percent with Poland -- which had already shown expansion of 0.7 percent in the second quarter and 0.1 percent between January and March -- yet to release its figures.
The Baltic former Soviet republic of Lithuania recorded the biggest upturn at 6.0 percent -- a massive swing from a 7.7 percent contraction.
Neighbouring Estonia was the bloc's poor relation with a 2.8 percent decline. - AFP
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