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Patchy Euro-Zone Recovery Reflects Imbalances
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inspector_monkfish
Posts: 9,276 Forumite
12:27 13Nov09 EURONOMICS: Patchy Euro-Zone Recovery Reflects Imbalances
MILAN--European economies are showing a two-speed recovery from the 2008-2009 economic recession, with industrial countries in the region's economic core setting the pace.
Fresh data released Friday showed Germany and France posting their second quarter of economic expansion in the third quarter. And Italy experienced its first quarterly growth in gross domestic product since the downturn began.
But Greece, Finland and Spain were still contracting. The new European Union members in the Baltics and along the trading bloc's periphery also remained mired in recession, having been hit hardest by recent financial crisis.
Data released by the Eurostat statistics office, the 27-country EU economy expanded by 0.2% in the third quarter from the previous period. The smaller grouping of 16 countries sharing the euro currency rose by a faster 0.4% rate.
The recovery followed a year of massive fiscal and monetary stimulus programs by governments and central banks to turn around the region's worst recession in 60 years.
But the emerging recovery is patchy, traceable to national differences
ranging from fiscal policies to industry profiles. It also could suffer a relapse if rising unemployment chills a nascent rebound in consumer spending, as government officials have warned.
"The bad times are over but the good times have not started, yet," said ING economist Carsten Brzeski.
In the euro zone, Germany's export-oriented economy is benefiting from the resurgence in global demand, a trend also helping French and Italian industry. Spain is held back by a 19% unemployment rate after its housing market collapsed a year ago.
Greece is only just entering recession, and at a time when the government is under EU pressure to dramatically throttle back spending to reduce budget deficits.
The two-track recovery in Europe poses challenges for the European Central Bank, which already is beginning to consider the timing and pace of withdrawing monetary stimulus that had supported the euro-zone economy and banking system over the past year.
"The European Central Bank faces the major challenge of balancing a return to growth in the stronger, large euro-zone economies with ongoing weakness in economies like Spain, Greece and Ireland," said Charles Davis, senior economist for the Centre for Economics and Business Research Ltd. in London.
Among the other EU countries, available third-quarter GDP data shows less promise. The U.K. economy contracted by 0.4% and U.K. officials are warning of a slow and gradual comeback.
"From a U.K. perspective today's figures do not make pleasant reading," said Davis. "According to the data only Cyprus, Estonia, Hungary and Romania suffered larger quarterly contractions in GDP than the U.K. in the third quarter."
For the EU as a whole, economists had expected a stronger outcome for the last period given large production gains in industrial nations such as Germany and Italy.
"This GDP growth (is) entirely a windfall from a policy-induced spurt of
activity in the auto sector," said Carl Weinberg, chief European economist for High Frequency Economics.
Euro-zone GDP could even contract again in the final three months of the year as car subsidies are phased out, he said.
The ravages of the global downturn were still vivid in the third-quarter data.
Both Italian and German GDP were down by more from a year earlier - 5.9% and 5.8% respectively - than the 4.8% yearly contraction for the euro zone as a whole. Both countries have run tighter fiscal policies than their peers in the currency union this year.
The broad absence of positive news about domestic demand supports the view that the euro-zone economy is far from healed.
Sluggish household demand and business investment makes Europe vulnerable to a slowdown in the global recovery, said Aurelio Maccario, chief euro-zone economist for UniCredit.
"It's not easy to see what could trigger a sustainable upswing," he said.
MILAN--European economies are showing a two-speed recovery from the 2008-2009 economic recession, with industrial countries in the region's economic core setting the pace.
Fresh data released Friday showed Germany and France posting their second quarter of economic expansion in the third quarter. And Italy experienced its first quarterly growth in gross domestic product since the downturn began.
But Greece, Finland and Spain were still contracting. The new European Union members in the Baltics and along the trading bloc's periphery also remained mired in recession, having been hit hardest by recent financial crisis.
Data released by the Eurostat statistics office, the 27-country EU economy expanded by 0.2% in the third quarter from the previous period. The smaller grouping of 16 countries sharing the euro currency rose by a faster 0.4% rate.
The recovery followed a year of massive fiscal and monetary stimulus programs by governments and central banks to turn around the region's worst recession in 60 years.
But the emerging recovery is patchy, traceable to national differences
ranging from fiscal policies to industry profiles. It also could suffer a relapse if rising unemployment chills a nascent rebound in consumer spending, as government officials have warned.
"The bad times are over but the good times have not started, yet," said ING economist Carsten Brzeski.
In the euro zone, Germany's export-oriented economy is benefiting from the resurgence in global demand, a trend also helping French and Italian industry. Spain is held back by a 19% unemployment rate after its housing market collapsed a year ago.
Greece is only just entering recession, and at a time when the government is under EU pressure to dramatically throttle back spending to reduce budget deficits.
The two-track recovery in Europe poses challenges for the European Central Bank, which already is beginning to consider the timing and pace of withdrawing monetary stimulus that had supported the euro-zone economy and banking system over the past year.
"The European Central Bank faces the major challenge of balancing a return to growth in the stronger, large euro-zone economies with ongoing weakness in economies like Spain, Greece and Ireland," said Charles Davis, senior economist for the Centre for Economics and Business Research Ltd. in London.
Among the other EU countries, available third-quarter GDP data shows less promise. The U.K. economy contracted by 0.4% and U.K. officials are warning of a slow and gradual comeback.
"From a U.K. perspective today's figures do not make pleasant reading," said Davis. "According to the data only Cyprus, Estonia, Hungary and Romania suffered larger quarterly contractions in GDP than the U.K. in the third quarter."
For the EU as a whole, economists had expected a stronger outcome for the last period given large production gains in industrial nations such as Germany and Italy.
"This GDP growth (is) entirely a windfall from a policy-induced spurt of
activity in the auto sector," said Carl Weinberg, chief European economist for High Frequency Economics.
Euro-zone GDP could even contract again in the final three months of the year as car subsidies are phased out, he said.
The ravages of the global downturn were still vivid in the third-quarter data.
Both Italian and German GDP were down by more from a year earlier - 5.9% and 5.8% respectively - than the 4.8% yearly contraction for the euro zone as a whole. Both countries have run tighter fiscal policies than their peers in the currency union this year.
The broad absence of positive news about domestic demand supports the view that the euro-zone economy is far from healed.
Sluggish household demand and business investment makes Europe vulnerable to a slowdown in the global recovery, said Aurelio Maccario, chief euro-zone economist for UniCredit.
"It's not easy to see what could trigger a sustainable upswing," he said.
Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)
(MSE Andrea says ok!)
0
Comments
-
Or:
It ain't actually as good as we keep telling yaIt's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Or:
It ain't actually as good as we keep telling ya
blyme jelly, if you can spot that all the way oop in the Black Country, why can't they see it in Brussels ??Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
inspector_monkfish wrote: »blyme jelly, if you can spot that all the way oop in the Black Country, why can't they see it in Brussels ??
Cos I'm keepin' it real, & ain't afraid to say it how it is.
Ya getsme star?
vote jellyIt's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Cos I'm keepin' it real, & ain't afraid to say it how it is.
Ya getsme star?
vote jelly
word
:cool:Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
inspector_monkfish wrote: »word
:cool:
Rispek blood!
Seriously, you can see a campaign for plain english thing here.
IM original text - 1.5 pages.
LJ translation - 10 words.It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Rispek blood!
Seriously, you can see a campaign for plain english thing here.
IM original text - 1.5 pages.
LJ translation - 10 words.
where wud we be without waffle matey !?
it makes the world go round...Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
inspector_monkfish wrote: »where wud we be without waffle matey !?
it makes the world go round...
Suppose the devil is in the detail.
Got no problem with that.
It's pointless waffle that gets me.
Better shut up now. As a person who has studied philosophy, I suppose I should know better. It's getting harder & harder to keep the government in the manner to which they have become accustomed.0
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