Economists warn that the eurozone remains weak, after Germany avoided recession but Italy suffered another contractionTrack all the action in the liveblogThe story: Eurozone growth figures: Germany avoids triple-dip recessionThe eurozone economy grew by 0.2% in the third quarter of 2014, according to data released by Eurostat this morning. Germany narrowly avoided recession, with growth of just 0.1%, while France grew by 0.3% and Greece - whose long slump has now ended - grew by 0.7%. But Italy fell into another recession, shrinking by another 0.1%.Todays figures show continued very sluggish growth in the eurozone, but it has avoided lapsing back into recession. The former powerhouse of the bloc, Germany, grew at a modest rate of just 0.1% in Q3, while France was the surprise with growth of 0.3%. However, the detailed data showed that the French surprise was primarily driven by relatively strong government spending growth, which is unlikely to be sustainable in the medium term. Meanwhile, Italy has fallen back into a mild recession.In contrast, most peripheral countries continue to grow at relatively strong rates with Greece growing seven times faster than Germany, closely followed by Spain and Portugal.The big underperformer was Italy. GDP fell by 0.1% in Q3 following a 0.2% decline in Q2. This means it has now officially entered its third recession since 2008. For governments that think that the ECBs conservativeness is at the heart of the eurozones problems, the comparison between Italy, on the one hand, and Spain and Greece is telling. Spain and Greece have done more in terms of structural reforms, and have also seen sharp falls in wages. This internal devaluation has restored competitiveness back close to the start of the euro levels. In Italy wages have remained extremely elevated. We expect eurozone economic growth to slowly improve in the coming quarters on the back of the decline in the euro, the fall in oil prices, easing bank lending and other financial conditions and the upswing in US demand.Economic output in the Eurozone expanded by 0.2% quarter-on-quarter in Q3 2014, according to data released by Eurostat this morning. Germany and France, the currency blocs two biggest economies, surprised on the upside: the German economy managed to avoid recession, growing by 0.1% and beating economists consensus expectation for a 0.1% decline. The surprise was even more positive for France, whose economy expanded by 0.3% again beating expectations for a 0.1% decline. Meanwhile, the Italian economy contracted by 0.1%.The fact that such weak growth rates are a cause for cheer is worrying in itself. After a false dawn when the Eurozone exited recession just over a year ago the fundamentals and overall economic picture have failed to see a substantial improvement.The Eurozone enjoyed stronger than expected economic growth in the third quarter, providing welcome news that fears of a renewed recession look exaggerated. However, the data will diminish hopes that the ECB will feel the need to take further action to stimulate growth.Official data from Eurostat showed gross domestic product rose by 0.2% in the three months to September. The region is also now estimated to have grown 0.1% in the second quarter rather than stagnating, as previously estimated.The news that the Eurozones economy is performing marginally better than expected in the third quarter, gives hope that the future is looking bright for the single currency bloc. After all, the ECB has cut lending rates to almost zero - making it cheaper than ever to borrow money - as well as cutting deposit rates to a negative, effectively charging banks to hold on to excess money. It is also engaged in a Q.E. light programme to increase the availability of cash that banks and financial companies have to lend. However, its important to consider the bigger picture and when you do, its clear that the future appears to be rather gloomy still. Unemployment remains incredibly high for a group of mostly developed economies at 11.5% and though it dropped at the end of last year and the start of this year, it hasnt fallen since May.Real GDP growth in the Eurozone picked up to 0.2% in non-annualized quarter over quarter terms in the third quarter of 2014; growth in the second quarter was revised up to 0.1% from 0.0% in the previous release. France expanded 0.3% from a quarter earlier in the third quarter, and Germany 0.1%. Italy shrank again in the third quarter, with real GDP down 0.1%.From a year earlier, real GDP in the Eurozone grew 0.8 percent in the third quarter, unchanged from a quarter earlier. While Germany is slowing, France is slow, and Italy is still mired in recession, the crisis economies that aggressively reformed their labor markets are now seeing better growth than the Eurozone average: Portugal grew 1.0% from a year earlier in the third quarter, Spain 1.6%, and Greece 1.4%. Irelands third quarter real GDP growth was not released in todays Eurostat report, but after very robust growth in the second quarter (6.5% in year-ago terms) it is surely also outpacing the Eurozone average. Continue reading...
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