Europe posted feeble economic growth figures yesterday, well short of US and Japanese rivals and with analysts offering little optimism going forward amid a public spending squeeze.
The EU released data showing that seasonally-adjusted gross domestic product for the debt-laden eurozone grew by just 0.2 per cent in the first quarter of 2010, an increase of 0.6 per cent compared to the same period in 2009.
Growth across the 27-nation European Union as a whole, which also includes Britain and Poland, was also pegged at 0.2 per cent between January and March, significantly short of major rivals.
The United States recorded 0.8 percent growth in the first quarter, while Japan powered ahead with 1.2 percent growth.
Worse, in the eyes of the experts, was detailed data showing that household spending and investments in the eurozone both beat a retreat.
"Private consumption fell 0.1 per cent," said Moilan-based Marco Valli of Unicredit, "mostly due to the drag coming from auto sales after the phasing out of several scrapping" schemes especially in France and Italy.
"With car sales seen weakening further and consumer confidence starting to take a hit from fiscal austerity announcements, consumption prospects for the second quarter are not going to improve much," he underlined.
"Fiscal tightening in several eurozone countries and the ongoing difficulties in labour markets will strain domestic demand," echoed Paris-based Clemente De Lucia of BNP Paribas.
"Over the coming quarters, therefore, exports will be the main engine of growth."
Exports rose by 2.5 per cent in the eurozone over the first quarter, but imports jumped by four per cent quarter-on-quarter.
"Data and survey evidence for the second quarter have been appreciably firmer overall, indicating that the eurozone should see significantly improved growth," said London-based IHS Global Insight analyst Howard Archer.
Forecasting expansion of 0.6 per cent for the present three-month period, he nevertheless acknowledged that "more aggressive tightening of fiscal policy in a number of countries is starting to weigh down on economic activity."
The breakdown of national figures last month had shown that, of the major eurozone countries, Italy posted the fastest growth, at 0.5 per cent, Germany was in line with the average and both France and Spain lagged narrowly behind.
Crisis-hit Greece's economy shrank by 0.8 per cent and that of Estonia, due to enter the eurozone next year, contracting by 2.3 per cent on a non-seasonally adjusted basis. Data for the final quarter of 2009 was amended to show 0.1-per cent growth having previously been reported as flat-lined.