Although preliminary data suggests that Germany and France – the struggling Eurozone’s two largest economies – will post growth in the third-quarter the level of economic expansion was minimal for both nations.
Both countries expanded by 0.2 per cent in the three months through to September.
Germany’s figure matched economists’ expectations but France was forecast to show no growth.
Despite neither economy recording contraction analysts are predicting declines in growth in the not-too-distant future.
Joerg Kraemer, chief economist with Commerzbank, asserted: ‘That was the last good number from Germany for the time being. The German economy will probably shrink somewhat in the fourth quarter given that orders have been falling for the last year and the business climate […] has caved in. That is due to the uncertainty caused by the Eurozone crisis. I don’t expect the German economy to return to decent growth rates until the middle of next year.’
Meanwhile an economist with Paris based Societe Generale assessed the French result in the following terms: ‘The third quarter is probably the result of a temporary rebound at the European level [business sentiment indicates that the] economy is heading to a moderate recession or at best remaining flat.’
Another economist, Thomas Costerg with London based Standard Chartered, reiterated this point. He said: ‘This resilience is unlikely to be sustained in the fourth quarter, when we see France’s GDP growth going negative as headwinds build. The continued labour-market deterioration is likely to dampen consumption, while decelerating European trade affects exports.’
The French economy has been stagnating since the first quarter of 2011 – the last three month period in which it recorded a gain higher than 0.2 per cent.
French figures released by the national statistics office Insee also showed that resumption in consumer spending and a rebound in exports were the primary reasons for the third quarter’s unexpected growth. External trade contributed 0.3 per cent to growth whilst household spending experienced a 0.3 per cent increase.
Today’s results are the latest in a line which indicate that the ongoing Eurozone crisis is damaging the economies of its most prominent members.
There was however some good news for the Eurozone this morning. Italy, one of the most indebted members of the 17-nation currency bloc, experienced slower than expected economic contraction in the third quarter. Although the nation remains in recession for the fifth consecutive quarter preliminary third quarter GDP figures released by the Italian Statistics Institute showed the slowest pace of contraction for 20-months.
As of 9:52 am
The Pound to Euro exchange rate is currently trading at 1.2412
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