April 15, 2021

Euro Zone’s Recession Ends, at Least for Now

The two biggest economies in the 17-nation euro zone each helped pull the region as a whole out of its doldrums, with Germany posting 2.8 percent annualized growth in the second quarter and France 2.0 percent. Over all, gross domestic product in the zone grew 1.2 percent, according to Eurostat, the official statistics office of the European Union. The second quarter’s growth slightly exceeded the 0.8 percent growth forecast by economists.

The euro zone’s growth fell short of the 1.7 percent second-quarter showing by the United States and 2.6 percent in Japan.

But even modest growth is a relief in a region where unemployment has risen to 12.1 percent and there are still fears of a new debt crisis and existential questions about the euro.

The meager growth rate will not make a serious dent in the problems of the 26 million people Eurostat says cannot find work, said Ralph Solveen, an economist at Commerzbank in Frankfurt.

“I wouldn’t look for a significant reduction in unemployment in the next year,” he said. “At best, we can hope for a stabilization of the job market.”

The fact that households in Germany and France helped to drive the rebound “suggests that the recent period of relative calmness in the euro zone is encouraging core consumers to spend money and might raise hopes of a narrowing of the economic imbalances within the currency union,” said Jonathan Loynes, an economist in London with Capital Economics.

A surprisingly strong showing came from Portugal, where the economy grew 4.4 percent in the second quarter, the highest rate in the 28-nation European Union. The return to growth after two years of deep recession was hailed by the center-right government in Lisbon as proof that austerity policies, imposed in return for a bailout of 78 billion euros ($104 billion) negotiated in May 2011, were finally bearing fruit.

Besides Portugal, there were signs of life elsewhere in the battered “periphery” of the euro zone. Spain’s economy shrank by 0.4 percent, improving on a 2.0 percent slide in the first quarter.

The economy of Cyprus, still reeling from the collapse of its banks and the troika’s remedy, shrank 5.6 percent at an annualized rate, the worst showing of any union member but a modest improvement from its 6.8 percent first-quarter decline. Even the hapless Greek economy, which has suffered 20 consecutive quarters of decline, got a small glimmer of hope with signs that the pace of contraction is slowing.

Economists say that cleaning up bad loans at Europe’s banks and getting them to lend again would help the economy gain firmer footing. Politicians are not expected to act until after Germany’s elections. The European Central Bank said last month that it would seek to encourage lending to Southern Europe by making it easier for banks to use certain securities as collateral.

Still, Mr. Loynes wrote, the weaker European economies “remain a very long way from the rates of expansion required to address their deep-seated problems of mass unemployment and cripplingly high debt.”

“The recession may be over,” he added, “but the debt crisis is decidedly not.’”

In the August vacation season, with much of Europe preparing for a long holiday weekend, politicians were generally muted in their reaction to the G.D.P. report. Officials said that there was no reason for complacency, but added that they saw some chance at longer-term growth.

Chancellor Angela Merkel of Germany, who is seeking a third term in Sept. 22 elections, had no immediate comment. But her economics minister, Philipp Rösler, wasted no time in proclaiming that “there is every reason for people in Germany to look optimistically into the future.” Ms. Merkel has been the main proponent of structural reform in the weaker economies of Southern Europe. But neither economists nor politicians used Wednesday’s figures to proclaim a victory for pro- or anti-austerity camps.

David Jolly reported from Paris, and Alison Smale from Berlin. Alissa J. Rubin and Scott Sayare contributed reporting from Paris, and Gaia Pianigiani from Siena, Italy.

This article has been revised to reflect the following correction:

Correction: August 14, 2013

An earlier version of this article misstated the rate of decline in Cyprus’s economy. Its gross domestic product shrank by 1.4 percent in the latest quarter, not by 1.7 percent (which was the rate of decline in the first three months of the year).

Article source: http://www.nytimes.com/2013/08/15/business/global/euro-zone-economy-grew-0-3-in-2nd-quarter-ending-recession.html?partner=rss&emc=rss