ECONOMY | 13.11.2009

Growth across Europe signals an end to the recession

The eurozone saw its first quarter of growth in over a year

The majority of the most powerful economies in Europe are showing growth for the third quarter. This news is prompting analysts to express cautious optimism for the future.

The recession is over. This was the resounding cry across the European Union on Friday after several of the most influential economies reported growth for the third quarter of 2009.

The 16-nation eurozone reported an average growth of 0.4 percent, while the 27-nation EU bloc increased by 0.2 percent.

The eurozone's growth ends a five-quarter stretch of contracting aggregate gross domestic product. The recovery is based on increased exports and the fruits of governmental stimulus packages.

Compared with the same period a year ago, the GDP of the eurozone contracted by 4.2 percent and of the EU by 4.3 percent.

Emerging sooner than expected

Europe's largest economy, Germany, posted a gain of 0.7 percent GDP based on increased exports. Along with France, where a 0.3 percent expansion occurred, Germany had already seen modest growth in the second quarter, but a second consecutive quarter of growth has some analysts marvelling over the speed of the recovery.

"The German economy has emerged from the deep recession earlier and faster than many had thought," ING senior economist Carsten Brzeski told AFP.

Numbers released by Brussels show that 10 out of 17 EU nations' economies had expanded during the third quarter.

Back in the black

Austria saw 0.9 percent growth, its first quarter-on-quarter increase since the second quarter of 2008. The Netherlands, which saw an increase of 0.4 percent in its GDP, joined Austria, Italy and Belgium in emerging from the recession with their first quarter of growth since the crisis began.

The UK and Spain, which reported contractions of 0.4 and 0.3 percent respectively, brought down the average numbers for the region.

The European figures compare with the US performance, where a 0.9 percent increase was reported.

However, many analysts continue to advise against premature celebration.

"Today's figures exaggerate the underlying pace of growth," Commerzbank's chief economist Joerg Kraemer said on Friday.

Analysts also warned that growth could only be achieved because of governments' economic stimulus packages.

"One cannot talk of a self-sustained recovery yet," the Austrian Institute of Economic Research said.

sjt/dpa/AFP
Editor: Susan Houlton

antigrafikon from DW