Kamis, 14 Agustus 2014

Eurozone Recovery Stalls With Weakness in Germany and France

By DAVID JOLLY August 14, 2014

PARIS — Economic growth in the eurozone sputtered to a halt in the second quarter, official data showed on Thursday, as Germany contracted and France stagnated again.

The gross domestic product of the 18 nations that share the euro did not expand at all from the first quarter of this year, when it grew 0.2 percent, according to Eurostat, the European Union statistics agency in Luxembourg.

The latest quarterly figure equates to a barely perceptible 0.2 percent annual rate, Eurostat said, compared with the 0.8 percent annualized rate from the first quarter.

The economy of the 28-nation European Union as a whole grew just 0.2 percent from the first quarter, for an annual pace of 0.7 percent, Eurostat said.

The figures fall far short of what the eurozone needs to lift more than 18 million people out of unemployment and to stop the slide of consumer prices into outright deflation. The data also indicated that Europe was beginning to falter even before the latest round of tit-for-tat sanctions with Russia over Ukraine intensified uncertainty among businesses.

Lena Komileva, chief economist at G+ Economics in London, said the data showed there was a "real risk" that the eurozone was headed back into recession and that the figures added to pressure on the European Central Bank to adopt stronger monetary stimulus.

"Not only does this render the E.C.B.'s anemic growth forecast of 1 percent for 2014 unrealistic," she added, "but it is hard to see just what will keep the recovery growing."

The eurozone performance bodes poorly for the already shaky global economic outlook. It comes a day after Japan reported that its G.D.P. shrank 6.8 percent in the second quarter at an annual rate and after the United States reported a rebound to 4.0 percent growth following a dismal start to the year.

Gross domestic product in Germany, which contributes more than a quarter of the output of the 18-nation currency bloc, shrank by 0.2 percent from the first quarter, reversing a relatively healthy 0.7 percent quarterly rate in the first three months of 2014, according to Destatis, the German national statistics agency.

The French economy showed no overall growth. Insee, the French national statistics agency, reported that business investment and exports declined, negating the effects of a small improvement in household spending.

Both the German and French figures were a little worse than economists had been expecting, but financial markets took the news largely in stride; the euro was little changed at $1.3360, and the Euro Stoxx 50, an index of eurozone blue chips, fell about 0.5 percent in early trading. The poor data led investors to seek the perceived safety of German government debt, with the yield on the 10-year bond dropping below 1 percent for the first time.

Economists say that unusually fair weather in the first quarter led to strong German construction growth at the start of the year that was not sustained in the second quarter, contributing to the weak G.D.P. figure, and they say they expect the economy to expand again later this year. But German businesses have warned that the European Union's economic sanctions against Russia could hurt the domestic economy.

Other indicators have pointed to a rough patch ahead for Germany, which remained relatively healthy through the worst of the economic crisis across the rest of Europe. The ZEW index of economic sentiment, released on Wednesday, showed morale among analysts and investors in the country plunging in August to its lowest level in more than 18 months.

Christian Schulz, an economist at Berenberg Bank in London, said in a research note that the poor second-quarter showing in Germany was probably a temporary phenomenon, but that "France remains mired in economic stagnation due to a lack of reform."

Germany continues to benefit from "a very strong labor market, rising wages and low inflation," Mr. Schulz added. "This underlying domestic strength highlights that Germany should resume growth soon."

In France, Finance Minister Michel Sapin said after the data had been released that the government had halved its estimate of growth in 2014 to 0.5 percent. He also acknowledged that the country's deficit would be more than 4 percent of G.D.P. this year, breaking a promise to eurozone partners to bring its finances closer in line with the European Union's 3 percent standard.

Nearly six years after the collapse of Lehman Brothers caused global markets to freeze, Europe has still not escaped the effects of the financial crisis and the sovereign debt crisis that followed it.

"The recovery remains weak, fragile and uneven," Mario Draghi, the president of the European Central Bank, said on Aug. 7. Mr. Draghi was speaking after the European Central Bank's Governing Council left its main interest rate at a record low 0.15 percent and its deposit rate at negative 0.1 percent.

Melissa Eddy contributed reporting from Berlin.


source : http://rss.nytimes.com/c/34625/f/640316/s/3d7fbe34/sc/2/l/0L0Snytimes0N0C20A140C0A80C150Cbusiness0Cweakness0Ein0Egermany0Eand0Efrance0Ehighlights0Efragility0Eof0Eeuropes0Erecovery0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm

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