European Economy Contracts More Than Estimated

Europe’s economy contracted more than estimated in the second quarter as consumer spending, investment and exports were weaker than earlier reported., Bloomberg 10/7/2009 9:45:19 AM

Gross domestic product in the 16-nation euro region fell 0.2 percent from the first quarter, when it dropped 2.5 percent, the European Union’s statistics office in Luxembourg said in publishing final figures on second-quarter GDP. The decline was sharper than the 0.1 percent decrease estimated on Sept. 2.

While the euro-area economy is gathering strength after governments injected billions of euros through tax cuts and spending incentives to fight the worst recession since World War II, the International Monetary Fund projected last week that Europe’s recovery will be slow and fragile.” Confidence in the economic outlook rose to a one-year high in September and investors also grew more optimistic.

From a year earlier, GDP decreased 4.8 percent in the second quarter, also sharper than the 4.7 percent drop estimated earlier. The economy may expand 0.2 percent in the third quarter and 0.1 percent in the three months through December, the European Commission forecast on Sept. 14.

Investment declined 1.5 percent in the second quarter, compared with the 1.3 percent drop estimated earlier, today’s report showed. Consumer spending rose 0.1 percent, half the increase estimated last month. Exports shrank 1.5 percent in the latest quarter, a sharper drop than the 1.1 percent decline estimated last month. Imports fell 2.9 percent, compared with the 2.8 percent drop estimated earlier.

The world economy is emerging from the deepest slump in more than six decades following interest-rate cuts and $2 trillion of government spending, tax breaks and infrastructure projects. Factory orders in Germany, Europe’s largest economy, rose more than economists forecast in August, data showed today.

European Economy Contracts More Than Estimated