Europe’s Economy Emerges From Recession


The euro-area economy emerged from its worst recession since World War II in the third quarter as exports from Germany and France helped compensate for households’ reluctance to increase spending.

Gross domestic product in the economy of the 16 nations using the euro rose 0.4 percent from the second quarter, when it fell 0.2 percent, the European Union’s statistics office said.

Europe’s economy is gathering strength after governments stepped up stimulus measures and the European Central Bank injected billions of euros into markets to encourage lending. While confidence in the economic outlook is at a 13-month high, rising unemployment, the expiration of stimulus plans and a surging euro are threatening to undermine a recovery.

In the year, euro-area GDP declined a seasonally adjusted 4.1 percent in the July-September period after dropping 4.8 percent in the second quarter. In the 27-nation EU, GDP rose 0.2 percent from the previous three-month period, when it dropped 0.3 percent. The statistics office is scheduled to publish a breakdown of third-quarter GDP on Dec. 3.

In Germany, Europe’s largest economy, GDP rose a seasonally adjusted 0.7 percent from the second quarter, when it increased 0.4 percent. The French economy expanded 0.3 percent in the third quarter, while Italy showed 0.6 percent growth. All three GDP figures were below economist forecasts.

Europe’s recovery is being threatened by the dollar’s 18 percent slide against the euro and the region’s policy makers are calling on China to shoulder some of that burden by allowing the yuan to appreciate. China has kept its currency steady against the dollar since July 2008 and ECB President Jean-Claude Trichet said on Nov. 5 that a stronger yuan would be welcome.”

With the euro’s ascent against the dollar since mid- February making exports more expensive and rising unemployment undermining consumer demand, the economy may be slow to gain momentum. Europe’s jobless rate rose to 9.7 percent in September, the highest since January 1999.


TradingEconomics.com, Bloomberg
11/13/2009 9:31:22 AM