Europe staggered out of recession in the September quarter, but left the UK and Spain as the only major economies in the zone still in the red.
Figures out Friday night showed that the eurozone of 16 countries and the 27-nation European Union as a whole, had growth of 0.4% and 0.2% respectively in the third quarter.
Growth of 0.7% in Germany, Europe’s most powerful national economy, 0.6% in Italy and 0.3% in France, lay behind the resurgent eurozone.
The 16-nation economy had shrunk by 0.25% between April and June after a record collapse of 2.55% in the first three months of the year.
France and Germany popped out of the red in the June quarter by narrow margins.
This time Germany was a bit stronger, thanks to exports and restocking by business. France was unchanged on 0.3%.
However, Britain is stuck in the red with negative growth of 0.4%, with Spain on minus 0.3%.
Greece and Ireland are also in the red, though we don’t have up to date figures as yet.
The UK and Spain had huge housing booms financed by easy credit: Spain’s ran for a decade.
Ireland also had a huge property boom, while Greece’s basic finances have been weak for a decade or more.
Yet the Spanish big banks are among the soundest in the world, although the smaller regional banks and state owned lenders are not so healthy.
Spain is not expected to emerge from the red until midway through next year at the earliest.
The EU and eurozone growth rates compare with the stronger 0.9% improvement in third-quarter economic output in the US (first reading).
Australia’s third quarter growth figures won’t be out for another fortnight, but it grew at 0.6% in the second quarter.
Ten EU countries grew in the quarter, seven contracted.
The Financial Times quoted JPMorgan London economist, David Mackie as saying:
"The third quarter GDP data suggest that the region has exited recession, but the move was hardly a decisive one.
"Despite a 12% annual rate gain in industrial production across the region, GDP managed to increase by only 1.5% annual.
"Clearly, there was a lot of weakness in construction and services.
"These data will reinforce the perceptions of the consensus: that the upswing will be lackluster and bumpy.
"And, they present a major challenge to our more upbeat forecast of growth over the coming year.
"Indeed, if GDP can only increase by 1.5% annually when IP grows at a double digit pace, the largest gain since 1984, one can only worry about the future."
Poland, which had already grown 0.7% in the second quarter and 0.1% in the first three months of the year, has yet to release new figures for the third quarter.
The Baltic former Soviet republic of Lithuania recorded the biggest rise, 6.0% — a massive swing from a 7.7% slump in the previous quarter.
Neighbouring Estonia was the bloc’s straggler with a 2.8% rise.
Unemployment remains the big problem, as it does in the US.
The jobless toll across the 27 member states of the EU is more than 22 million, and due to rise into 2010.
The recovery is now being hurt by the weakening US dollar which is boosting the value of the euro.
France was a surprise: the 0.3% growth rate was unchanged on the June quarter and French consumer spending was weak, despite the government’s aggressive car scrappage scheme.
German consumer spending fell as its car scrappage scheme faded from impacting demand.
Both countries have seen consumers spend heavily on cars this year and there are doubts they will have enough firepower to step up spending in 2010.
