German economic recovery falters

Germany’s recovery from recession
faltered in the final quarter of 2009, according to preliminary figures
released on Friday.

The German economy failed to grow
at all in the last three months of the year, with GDP unchanged compared with
the previous quarter.

Meanwhile,
France reported a 0.6 per cent rise in GDP for the same three-month period –
better than analysts expected.

Figures
also showed the eurozone economy grew 0.1 per cent in the same quarter.

This
represents a slowdown in the economies of the 16-nation zone, which grew by 0.4
per cent between July and September last year.

Official
first estimates indicated that the Italian economy shrank by 0.2 per cent after
growing by 0.6 per cent in the previous quarter.

They
also showed that Spain and Greece remained in recession, with the Greek economy
contracting by 0.8 per cent.

On
Thursday after a summit in Brussels, EU leaders said Greece had to take further
measures to tackle its huge debts and cut its budget deficit by 4 per cent this
year.

They
agreed in principle on Thursday to support Greece, but no specific commitments
on aid were agreed.

Greece’s
debt crisis has put pressure on the euro, making markets nervous. Following the
German GDP figures, the euro fell further against both the pound and the
dollar.

Worse
than feared

The
stall in German growth follows two consecutive quarters of growth in Europe’s
largest economy.

Germany
emerged from recession last summer thanks to a recovery in its exports – on
which it largely relies.

“We
no longer have a slump, but rather a very weak recovery”
Gerd Hassel, economist, BHF Bank

“Exports
were the only positive contribution,” said the Federal Statistical Office.

The
BBC’s Tristana Moore in Berlin said the figures were “worse than
expected”.

Analysts
were surprised by the figures, with the majority expecting modest growth in the
last three months of the year.

Year-on-year,
the economy shrank by 1.7 per cent, the figures showed.

“We
no longer have a slump, but rather a very weak recovery,” said Gerd
Hassel, economist at BHF Bank. “The first quarter will probably turn out
weak too.”

Data
earlier this month showed a strong rebound in German exports, with exports up
for the fourth month in a row in December.

That
was despite an 18.4 per cent fall in exports for 2009 as a whole – the biggest
year-on-year fall since 1950, losing it the title of world’s biggest exporter
to China.

Meanwhile
another quarter of growth in the French economy added to optimism over the
strength of France’s recovery from recession.

“I
think [0.6 per cent] is really a satisfactory result that proves that the stimulus
measures we took … were efficient,” said Christine Lagarde, the French
economy minister, speaking to a French radio station.

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