6th Jun 2023

Germany returns to growth, Italy falls into recession

Germany's economy has returned to growth while Italy has officially fallen back into recession, according to data for the third quarter of 2014 published Friday (November 14) by Eurostat.

Overall, the eighteen countries in the eurozone grew by 0.2 percent and by 0.3 percent across the EU-28 having flatlined in the previous three months, the EU's statistical agency said.

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Although its growth rate of 0.1 percent is meagre, Germany's data is better than expected. Declining business confidence and a sharp dip in exports had prompted many to fear that the eurozone's economic powerhouse was facing sharper difficulties.

Germany is also one of the EU countries to be most affected by the bloc's trade sanctions battle with Russia. It is forecast to grow by 1.2 percent this year followed by 1.3 percent in 2015.

There was also good news in France which grew by 0.3 percent, its strongest quarter for more than a year.

Romania posted the strongest figures for the three months between July and September, with its economy expanding by 1.9 percent.

Meanwhile, Greece, Spain and Portugal, all of whom received EU funded bailouts, posted growth.

However, the Italian economy contracted by 0.1 percent, the second quarter in succession that output has fallen. Italy has now failed to post a quarter of growth since 2011. Cyprus is the only other EU country to be in recession.

The figures are marginally better than expected by market analysts, but still paint a picture of sluggish economic performance across the bloc. Governments are under increasing pressure to boost investment in a bid to inject life into their economies, while EU Commission boss Jean-Claude Juncker is expected to flesh out his flagship €300 billion investment programme in December.

The European Central Bank has also been urged to beef up its bond and securities buying programmes to stimulate more bank lending and business activity.

Germany stops accumulating fresh debt

Germany has managed to have the first budget since 1969 not to accumulate fresh debt, just as the EU commission is about to explain what "flexibility" means when applying EU rules on public deficit and debt.


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