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LONDON (AP) — The economy of the 17-nation euro bloc expanded 0.2 per cent in the third quarter, thanks largely to growth in Germany and France during a turbulent period in which a raging debt crisis raised fears of a new recession, official data showed Tuesday.The second consecutive quarterly rise of 0.2 per cent, reported by the EU statistics office Eurostat, was widely-anticipated. Figures earlier had showed Germany and France grew grow solidly — 0.5 per cent and 0.4 per cent — during the July to September period as consumers continued to spend.
France, Europe’s second-biggest economy, managed to avoid falling into recession as the second quarter figures were revised to show a 0.1 per cent contraction — a recession officially occurs after two quarters of negative growth.
However, many economists think the eurozone as a whole won’t be able to avoid a recession over the coming year as the debt crisis that’s already seen three countries — Greece, Ireland and Portugal — bailed out is now threatening much-bigger economies like Italy and Spain, and even raising questions over France’s debts.
“Future growth prospects have deteriorated markedly since the summer, making a ‘mild recession’ more likely,” said Frederik Ducrozet, an economist at Credit Agricole.
Tuesday’s figures were Eurostat’s first estimate for the quarter and do not include a number of countries, such as Greece and Italy.
Signs of a looming eurozone-wide recession were evident in the figures — Cyprus, Portugal and, perhaps most surprisingly, the Netherlands, all contracted during the quarter.
“There is no reason for growth optimism,” said Ferdinand Fichtner of the German Economic Institute, DIW, warning that fourth-quarter growth is expected to be much slower as the bite of the eurozone crisis is felt.
“People are uncertain,” Fichtner told the news agency dapd. “That is poison for growth.”
When the debt crisis erupted in 2009, Europe’s economy was just recovering from its deepest recession since World War II largely on the back of Germany, the region’s biggest economy. Germany enjoyed a boom in exports and improved domestic demand, even as many in the eurozone struggle in the face of mammoth debts.
The eurozone’s third quarter performance compared poorly with those of its peers. Eurostat said the United States grew by a quarterly rate of 0.6 per cent, while Japan boomed by 1.5 per cent, though largely because it was making up for lost output in the aftermath of a devastating earthquake and tsunami.
The economy of the wider EU, which also includes Britain and Sweden, also grew by 0.2 per cent.
Melissa Eddy in Berlin contributed to this report.
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