Europe recession deepened in Q1, may have hit bottom
PARIS - Europe sank to what may have been the recession's low point in the first quarter of this year as tumbling German exports and investment plus further sharp drops in output elsewhere hastened the pace of a year-old contraction.
Official GDP estimates showed the period was the worst since records at European level began in 1995, though more up-to-date business surveys suggest the first global recession since World War Two may subsequently have passed its most severe.
"Although we are nowhere near the peak in unemployment, we can safely assume that the first quarter was the worst in terms of the pace of decline," said Martin van Vliet, an economist at ING bank.
"The latest ugly GDP figures should, however, mark the trough of the current 'Great Recession', said Alexander Koch, an economist at UniCredit bank.
GDP, or gross domestic product, fell 2.5 per cent versus the last quarter of 2008, both at the level of the 16-nation euro currency zone and 27-member European Union bloc, according to the EU statistics office.
German's GDP fall of 3.8 per cent, which was far steeper than forecast by economists, was the worst since calculations of that kind began in 1970, the country's statistics office said.
French GDP slipped heavily too if less dramatically, by 1.2 per cent, the official data there showed, while Italian GDP fell 2.4 per cent, the sharpest dip since 1980.
Economists had forecast a bad but less dramatic fall of 2.0 per cent in euro zone GDP, after a drop of 1.6 per cent in the previous quarter and the declines in several eastern European countries outside the euro zone were no less startling.
Czech and Hungarian GDP reports showed the biggest drops since their records began.
Like Other Regions, But Worse
Europe's plight is shared by the industrialised world and even fast-developing China showed its weakest pace of growth on record in the first quarter.
US GDP slid for the third straight quarter for the first time since the oil crisis recession of the mid-1970s, according to official data published on April 29.
The fall there in in the US method of counting equates to one of about 1.6 per cent in European measures, suggesting the first US quarter there, if bad, was not as bad as Europe.
Britain, which is not in the euro zone but depends a lot on its euro neighbours for trade, reported the biggest quarterly GDP drop since 1979 in the first quarter, when GDP dropped 1.9 per cent from the previous quarter.
In all, while the figures are provisional and US data is often subject to heavy revision, the picture emerging from the first quarter is that GDP was dire across the board, but worse in mainland Europe.
The first quarter drop eased in the United States from the preceding quarter but accelerated in the euro zone and Britain, though the euro zone and EU drops exceeded Britain's.
More detailed information on GDP is expected on May 20 from Germany and many other mainland European countries as well as a first estimate from Japan, though polls of economists say Japanese GDP could have been the worst since World War Two in the opening quarter of 2009.
France's performance was notably stronger than that of Germany, Italy or Spain due to the fact that consumer spending held up relatively well, rising by a marginal 0.2 per cent. Germany is far more export-dependent and foreign demand has evaporated in the broader downturn.
Global GDP is expected to contract 1.9 per cent in 2009 as a whole, according to the International Monetary Fund, which sees US GDP dropping 2.8 per cent, euro zone GDP 4.2 per cent, Japanese GDP 6.2 per cent and British GDP 4.1 per cent, alongside a slowing in China to 6.5 per cent growth from nine per cent last year.
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