Tuesday

24th Nov 2020

German growth too weak to lift eurozone from recession

  • The eurozone is in its longest recession since Eurostat began collecting data (Photo: Valentina Pop)

The eurozone economy continues to shrink as Germany's economy grew by a meagre 0.1 percent in the past three months, while France slid back into recession, according to data from the EU statistics office Eurostat published on Wednesday (15 May).

Shrinking by 0.2 percent in the first three months of 2013, the eurozone economy has now been in recession for the past one and a half years, the longest period since 1995, when Eurostat started collecting the data.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The worst off are Greece - whose economy shrunk by 5.3 percent - and Portugal (-3.9%) compared to the same period last year.

France is also officially back in recession, after its economy shrank by 0.2 percent over the past six months, amid unemployment rates of over 10 percent and low business and consumer confidence. An economy is considered to be in recession if its economy shrinks two quarters in a row.

Meanwhile, Germany bounced back to growth after a three-month contraction at the end of 2012, but the 0.1 percent - mostly due to increased consumer spending - was not enough to put the overall eurozone economy back on the growth track.

The Eurostat data also shows the German economy shrunk by 0.3 percent when compared to the same period last year. The German statistics office blamed the poor performance on the "extreme winter weather" that lasted well into April.

At the opposite end, Latvia posted growth figures of 5.6 percent and Lithuania of 4.1 percent compared to the same period last year. Both countries are hoping to join the euro soon - Latvia in January and Lithuania in 2015.

Neighbouring Estonia, who joined the eurozone in 2011, had the highest growth in the eurozone compared to last year: 1.2 percent. But in comparison to the previous three months, the Estonian economy also shrunk by one percent.

Figures for Cyprus show that the country's economy has deteriorated dramatically over the period that its bailout was being negotiated: it shrank by 4.1 percent compared to January-March 2012.

Italy, Spain, Finland and the Netherlands also saw their economies shrink both compared to the previous quarter as well as the previous year.

The European Central Bank earlier this month lowered its key interest rate to a record low of 0.5 percent in a bid to jump-start the eurozone economy. But banks in southern European countries continue to lend money at much higher interest rates, with ECB chief Mario Draghi admitting that the cheap loans do not yet "trickle down" to the real economy.

IMF halves growth forecast for Germany

The IMF has halved its growth forecast for Germany to 0.3 percent this year "amid still elevated euro area uncertainty" and asked the economic powerhouse not to "overperform" on fiscal consolidation.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

Budget deal struck, with Hungary threat still hanging

Ultimately, the European Parliament managed to squeeze an extra €16bn in total - which will be financed with competition fines the EU Commission hands out over the next seven years, plus reallocations within the budget.

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!
  2. UNESDAMaking healthier diets the easy choice
  3. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  4. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  5. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  6. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector

Latest News

  1. There is 'no Russia-Turkey alliance'
  2. EU air quality improves, but pollution levels still high
  3. 'Golden Passports': Malta takes 67 days to respond to EU
  4. Covid-19: Romania's rural kids hit hardest by pandemic
  5. 'We call on the EU to appoint a Horn of Africa envoy'
  6. Berlin Foreign Policy Forum 2020
  7. EU stands by anti-Covid drug, despite WHO doubts
  8. Russia is 'pre-eminent naval power' in Mediterranean

Join EUobserver

Support quality EU news

Join us