Germany and France, the eurozone’s two largest economies, performed better than expected in the third quarter, with Germany narrowly avoiding a triple-dip recession.
There was relief in financial markets as Europe’s largest economy eked out growth of 0.1% between July and September. The previous quarter was also revised higher to show a contraction of 0.1% rather than 0.2% as previously estimated, Germany’s Federal Statistics Office (Destatis) said. Many economists had feared the country could slip back into recession, defined as two or more consecutive quarters of contraction. Germany had a strong start to the year with 0.8% growth in the first quarter.
France expanded 0.3% in the third quarter, the highest since the second quarter of 2013 and beating analysts’ expectations of 0.2% growth, the French statistics office Insee said.
Italy and other countries will release their figures later on Friday morning, followed by keenly awaited data for the entire eurozone at 10am GMT. They are expected to show a 0.1% rise in third-quarter GDP, the same as in the second quarter.
ABN Amro economist Nick Kounis is predicting that the eurozone expanded 0.2% based on the figures so far. Spain looks to have been the star performer in the eurozone this quarter, having reported 0.5% growth.
French growth was driven mainly by government spending, up 0.8%, while household spending rose just 0.2% and trade made a negative contribution. Economists were not impressed that the flat performance in the second quarter was revised away to show a 0.1% contraction.
France’s finance minister Michel Sapin noted growth of 0.3% isn’t enough to fix the country’s jobs crisis: “Economic activity has picked up slightly but remains too weak to ensure the job creation our country needs.”
Business investment fell in both Germany and France, suggesting firms may have been spooked by the poor economic outlook and the Ukraine crisis.
Destatis said: “The German economy turned out to be stable in a difficult global economic environment.” It credited a “considerable” increase in household spending, while trade also underpinned growth.
But ING economist Carsten Brzeski said the shine has been knocked off Germany’s second economic miracle. “Almost all the glamour of the second German Wirtschaftswunder seems to be gone. Chances are high that after the release of the eurozone data, today’s data mark the first time the German economy underperformed the rest of the eurozone in two consecutive quarters since the doomy days of the crisis in late 2008 and early 2009.”
He noted that the German economy had grown by an average of 0.2% each quarter since early 2013. “This makes the eurozone’s powerhouse rather a one-eyed king in the land of the blind than an economic superman.”
