Eurozone countries emerge from recession

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The Independent Online

The 16-strong group of nations in the eurozone have emerged from recession, official figures showed today.

European countries using the single currency grew their collective economy 0.4% in the third quarter.

While it is the first time the bloc as a whole has shown growth, France and Germany have enjoyed their second period of positive output.

They joined the US and Japan, which have also shrugged off the economic gloom.

The European Union as a whole - which includes the UK and Sweden - is also out of recession in the July to September period, with a 0.2% growth in output.

Recent figures for the UK, however, showed the economy shrunk 0.4% in the third quarter.

The rise in eurozone output was the first increase in six quarters and brings to an end Europe's sharpest recession since the Second World War.

But the preliminary figures from EU statistics body Eurostat were below the 0.6% quarter-on-quarter growth that economists had predicted.

This was put down to smaller-than-expected growth in the group's major economies, such as Germany and France.

According to data from Germany's Federal Statistical Office the country saw its recovery accelerate in the third quarter, with a quarter-on-quarter economic expansion of 0.7%.

This compared with a gross domestic product (GDP) increase of 0.4% in the previous three months - itself an upwards revision.

Europe's biggest economy saw an increase in exports in recent months, but a decline in consumer spending dragged on growth.

France stayed in positive territory, growing at 0.3% in the most recent period, according to a preliminary estimate by its national statistics agency.

The country was also helped by improving exports but failed to make progress on the previous quarter, which saw the same level of growth.

Howard Archer, of IHS Global Insight, described the eurozone recovery as "a trot rather than a canter".

He said it seemed evident that a "marked increase" in exports was behind the economic growth for many of the countries, although consumer spending is thought to have stayed subdued.

Mr Archer predicted that the eurozone recovery would not be smooth and forecast growth in output of around 1% next year.

"The likely fragility of the recovery means that both governments and the European Central Bank need to be wary about withdrawing stimulus measures too soon or too aggressively," he added.

Martin van Vliet, of ING, said the figures were "cause for relief, but not celebration".

He said a sustained recovery was likely to require a boost in consumer spending and business investment.

"Moreover, even if the economy continues to recover at the current pace, it would still take until 2012 before real GDP returns to its pre-crisis level," he said.

"The eurozone's worst post-war recession may be officially over, but unfortunately for many people and businesses it will continue to feel like a recession for some time to come."

Spain's economy contracted 0.3% in the third quarter as it continued to suffer the effects from the collapse of its property market.

The eurozone recession was particularly savage at the turn of the year as the 1.8% quarterly decline recorded in the final months of 2008 was followed by an even bigger 2.5% drop in the first quarter of this year. Output fell a more modest 0.2% in the second quarter.

Despite the third quarter increase, eurozone GDP was 4.1% lower than a year earlier, although this was an improvement on the 4.8% slide recorded in the second quarter.