The eurozone yesterday posted meagre 0.2 per cent growth in the second quarter, dragged down by a rapid decline in German performance and a stagnant France economy.
Moving in the opposite direction from the United States and Japan, which both logged steady improvement, Eurostat’s preliminary estimate showed the eurozone slowing from 0.8 per cent growth in the first three months of 2011.
Its powerhouse economy, Germany, saw growth collapse spectacularly from a downward-revised 1.3 per cent to a meagre 0.1 per cent expansion.
France, the eurozone’s second largest economy, reported last week that its growth stalled in the second quarter, following 0.9 per cent in the first.
Italy and Spain, each under pressure on bond markets with the European Central Bank being forced to step in to reduce lending rates, logged only 0.3 per cent and 0.2 per cent growth respectively.
Analysts polled by Dow Jones had forecast 0.3 per cent growth across the single currency area of 330 million people.
“Admittedly, a correction in the second quarter was expected,” said Paris-based BNP Paribas analyst Clemente De Lucia. “More alarming, however, is that its underlying trend is losing momentum.”
He said that recent hard data showed that in the United States, “the recession was much worse than previously estimated and the recovery weaker than anticipated”.
The US increased its second-quarter growth from 0.1 per cent to 0.3 per cent, while Japan, which had logged a 0.9 per cent contraction between January and March, came in at minus 0.3 per cent this time.
Also citing a “cooling off” in emerging economies led by China who had driven the global exit from recession after the 2008 financial crisis, Mr De Lucia said the coming quarters would be choppy.
“The recent intensification of market turmoil will not help,” he said, referring to recent sharp sell-offs on stock exchanges.
He underlined: “The longer financial market tensions persist, the greater the risk that they spill over the real economy.”
Another eurozone powerhouse, the Netherlands, saw a similarly sharp contraction in its rate of growth, from 0.8 per cent to the same 0.1 per cent level as Germany.
Notable eurozone exceptions were triple-A rated Austria, which held up at one per cent growth, and Finland, which logged 1.2 per cent.
Belgium, a country without a stable government for more than a year, posted 0.7 per cent growth
The 27-member European Union as a whole posted the same 0.2 per cent growth rate in the second quarter.