France and Germany recession 'ends'

Germany and France have unexpectedly emerged from recession, with the Eurozone's two largest economies growing by 0.3 per cent in this year's second quarter. 

• Other countries that use the euro also appear to be pulling out of the economic crisis, with the zone’s gross domestic product (GDP) falling by only 0.1 per cent in the second quarter.
• The figures, from Eurostat and French and German agencies, have surprised many analysts, who had forecast gloomier economic results.
• “The data is very surprising. After four negative quarters France is finally coming out of the red,” Christine Lagarde, the French economy minister, told RTL radio.
• In Germany it is the first time the country has seen growth since the first quarter of 2008, and a dramatic turnaround from the first quarter’s contraction of 3.5 per cent.
• Speaking to Al Jazeera, Vanessa Rossi, an economist, warned that people should not be over optimistic about the figures.
• Rossi said: “It’s very nice to be able to headline this as the end of the recession, and I much welcome better confidence on the back of that, but the reality behind the figures isn’t quite so strong.
• “I think there are a number of issues that have massaged these numbers into a direction that looks much more positive than they seem.
• “I don’t think it’s going to be a really steep uphill from here, we’re going to have some struggles through this next few months.”
• Germany’s federal statistics office said the return to growth was due to “positive momentum from personal and public expenditure as well as the building sector,” following two stimulus packages worth $190bn.
• But Karl-Theodor zu Guttenberg, the German economy minister, said the country was still a long way off full recovery.
• “The figures should encourage us,” he said.
• “However, there are no grounds for euphoria, because we’re still a long way from seeing the economy back at the level that it was at last year.”
• The latest figures are raising hopes that the recession, Europe’s worst since 1945, is beginning to ease across the region.
• “The recession has ended. Not just in Germany. The post-Lehman global confidence shock has receded. Firms are investing again,” Joerg Kraemer at Commerzbank, a German bank, said.
• Eurozone second quarterly results were also an improvement on the first quarter’s 2.5 per cent contraction.
• The economy in the 27-nation European Union as a whole shrank by 0.3 per cent in the second quarter, weighed down in part by a 0.8 per cent drop in Britain.