Stronger growth in the eurozone’s two largest economies, Germany and France, helped the eurozone to emerge from its longest recession to date in the second quarter, confirming expectations a fragile recovery was under way.
It took seven quarters for the 17 countries sharing the euro to return to growth of 0.3 per cent, on a seasonally-adjusted basis, data from the European Union’s statistics office Eurostat showed.
Confirming a fragmented picture of the rebound, Spain’s economy fell by 0.1 per cent on the quarter, while Italy and the Netherlands both dropped by 0.2 per cent.
Bailed eurozone peer Portugal posted a 1.1 per cent expansion, showing the fastest growth in the eurozone in the three months to June, data showed.
The eurozone’s two biggest economies, Germany and France, both grew more than forecast in the second quarter.
The German economy grew by 0.7 per cent in the second quarter of 2013, its largest expansion in more than a year, thanks largely to domestic private and public consumption.
France’s economy expanded 0.5 per cent, pulling out of a shallow recession to post its strongest quarterly growth since early 2011. The expansion was driven by consumer spending and industrial output, although investment dropped again.
Malta’s GDP data are not yet available. Of the 22 countries for which data were available, 15 of the EU28 saw quarter-on-quarter growth, while six saw negative results.
The biggest decrease was registered in Cyprus (-1.4 per cent).
Compared with the same quarter a year ago, the eurozone GDP shrank by 0.7 per cent, while that of the EU27 by 0.2 per cent.
The bloc’s performance in the second quarter beat expectations of 35 economists in a Reuters poll, who anticipated a rise of 0.2 per cent.
The economy fell in the second quarter by 0.7 per cent, compared with the same period last year, with the market anticipating a 0.8 per cent decline.
The single currency area now faces an uneven and bumpy recovery dented by record high joblessness and belt-tightening austerity in peripheral countries, which need to speed up market reforms and boost growth.
The Reuters poll, published on Tuesday, suggested the eurozone economy is not likely to gain real momentum before 2015, with quarterly growth not seen exceeding 0.4 per cent before then despite the recent signs of improvement.
Eurozone industrial production rose in April and June, construction output picked up after a weak first quarter hit by bad weather, and joblessness fell for the first time in more than two years in June.
The International Monetary Fund said earlier this month that Madrid’s reform progress, fiscal consolidation and crackdown on external imbalances were bearing fruit, but that urgent action was needed to create jobs and stimulate growth.
The scope and form of the austerity drive in the European Union is now changing. Policymakers still say adjustments in excessive deficits and high debt are essential. But they now emphasise that any action taken must not choke growth and must help create jobs.
ECB President Mario Draghi said this month that labour market conditions remained weak, though he expected the bloc’s growth to benefit from a gradual recovery in global demand.
“Overall, euro area economic activity should stabilise and recover at a slow pace. The risks surrounding the economic outlook for the euro area continue to be on the downside,” Draghi said after the ECB rate meeting on August 1.