By Nick Mann | 14 August 2012
Gross domestic product in the eurozone and wider European Union shrank by 0.2% in the second quarter of 2012 over the previous three months, according to figures published this morning by Eurostat.
Compared with the same period last year, the GDP of the single currency bloc was 0.4% lower and the EU as a whole 0.2%, the EU statistical service also estimates.
In the first quarter of 2012, both the EU as a whole and the eurozone recorded flat economic growth, steering clear of recession after shrinking in the final quarter of 2011.
Among Europe’s largest economies, the strongest second quarter performance came from Germany, which recorded 0.3% growth on the back of 0.5% growth the previous quarter.
For the third successive quarter, France’s economy remained stagnant, while the UK’s shrank for the third consecutive quarter – by 0.7% - confirming it is in recession.
Other economies that contracted between April and June include: Portugal (–1.2%), Finland (–1%), Cyprus (–0.8%), Italy –0.7%), Belgium (–0.6%), Spain (–0.4%), Czech Republic (–0.2%) and Hungary (–0.2%).
While figures for Greece are not included in the Eurostat data, separate statistics published by the Greek Statistical Office yesterday revealed the country’s economy shrank by 6.2% between April and June – the ninth successive quarter it has contracted.
Europe’s economic performance continues to compare unfavourably with that of the United States, whose GDP grew by 0.4% in the second quarter, after 0.5% in the previous three months. Compared with the same quarter a year earlier, it grew by 2.2%.
Japan’s economy also outperformed the EU and eurozone, achieving 0.3% growth over the previous quarter and 3.6% over the same period a year ago.
Azad Zangana, European economist at Schroders, said the figures for the eurozone were in line with expectations, despite better than expected performance by Germany, France and the Netherlands (whose GDP grew by 0.2%).
‘Overall, the story of a resilient core and a floundering periphery continues. Very low unemployment and falling inflation in Germany are helping to boost household purchasing power and consumption. Meanwhile, austerity in Italy, Spain and Portugal continues to hit business investment and consumption,’ he explained.
‘Looking ahead, the resilience of the core economies is likely to be tested in the coming quarters, with leading indicators suggesting slowing order books and falling business confidence. Of course, the outlook remains very uncertain given the nature of the sovereign debt crisis, although we expect a further deterioration in the growth numbers in Q3, before a turning point at the end of the year.’
Further bad news for the EU economy came as production figures for June, also published today, showed a 0.6% fall in the eurozone area and 0.9% drop for the EU as a whole compared with the previous month.
On an annual basis, June 2012 industrial production in the single currency bloc was 2.1% less than a year earlier, while it fell by 2.2% for the EU.
