Saturday

28th May 2016

Eurozone slides deeper into recession, Germany grows

  • By far the worst is Greece, whose economy shrunk by 6.2 percent compared to last year (Photo: Travel Aficionado)

Eurozone economies continue to go separate ways, with overall recession of 0.2 percent, while Germany's economy is still growing by 0.3 percent, according to the latest Eurostat data comparing the three months from April to June to the previous quarter.

The so-called flash estimate, which is expected to be confirmed by final data in September, puts the eurozone and the EU as a whole on a declining trend, both having their gross domestic product shrinking by 0.2 percent compared to the first three months of the year.

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When compared to the same period last year, the 17 euro-states fare even worse, with their GDP shrinking by 0.4 percent, while the 27 EU states remain at the same 0.2 percent recession.

Germany's economy grew by 0.3 percent of GDP, while France stagnates. Portugal is shrinking by 1.2 percent, Italy and Spain by 0.7 and 0.4 percent, respectively.

"The flash estimate is in line with markets expectations and our economic forecast," EU commission spokesman Ryan Heath said on Tuesday (14 August) during a press conference.

However he highlighted that the data for the UK is worse than expected, with its GDP shrinking by 0.7 percent compared to the previous three months and by 0.8 percent compared to the same period last year.

By far worse is Greece, whose economy shrunk by 6.2 percent compared to last year.

Heath said this was mainly due to the two rounds of elections and the delays that occurred in implementing the terms of the second bailout.

On Tuesday, the Greek government managed to sell €4 billion worth of three-months bills to its own banks, which in turn had the money from the first tranche of the €130 billion bailout agreed in March.

This will allow Athens to repay a batch of bonds maturing on 20 August and keep the European Central Bank (ECB) lifeline for its banks open.

A mere reshuffling of debt to buy Greece the time needed for the troika of international lenders to write up a key report in September, with the second tranche of €31.5bn not expected until October.

Finance ministers baulk at tax-avoidance rules

Member states will discuss again in June a proposed directive to outlaw practices used by large companies to avoid paying taxes. Meanwhile, the European Parliament makes progress on its probe of Panama Papers.

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