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Germany, Netherlands Slow Eurozone's Economic Growth

Friday, 12 Nov 2010 02:38 PM

The economic recovery in the 16 countries that use the euro slowed in the third quarter of the year largely on the back of lower growth in Germany, Europe's biggest economy, and an unexpected fall in output in the Netherlands, official figures showed Friday.

Eurostat, the EU's statistics office, said that economic growth in the eurozone moderated to 0.4 percent in the July to September quarter from the 1 percent growth recorded in the previous three-month period.

It's also slightly lower than market expectations of 0.5 percent.

The figures once again highlight the big disparities within the eurozone: while the core countries, such as Germany and France, continue to grow solidly, albeit at a slower pace, debt-laden Greece remains mired in recession.

Earlier, Germany's Federal Statistical Office reported that economic growth in the country slipped back to a still-healthy and broader-based 0.7 percent following a spectacular 2.3 percent boom in the previous three-month period. Meanwhile, French growth eased to 0.4 percent from 0.7 percent.

In contrast, Greece shrank a further 1.1 percent in the third quarter as the government continues to enact austerity measures in an attempt to get a handle on the country's massive debts.

Other countries just staggered — Italy saw its growth rate halve to 0.2 percent while the Netherlands unexpectedly saw output dip by 0.1 percent.

Jennifer McKeown, senior European economist at Capital Economics, said the contraction in export-reliant Netherlands was a "worrying sign" that the slowdown in the global economic recovery and the euro's recent strength are starting to take their toll on some of the core economies.

"This is probably a sign of things to come for Germany, where the industrial surveys point to a sharp slowdown," said McKeown. "With the periphery looking worse and worse, we still see the eurozone's recovery grinding to a halt next year."

Eurostat also said that the wider 27-country EU, which includes non-euro members such as Britain and Sweden, saw growth moderate to 0.4 percent in the third quarter from 1 percent in the previous three-month period.

On a year-on-year basis, eurozone economic growth was up an unchanged 1.9 percent, while the EU rate increased modestly to 2.1 percent from 2 percent.

These are only preliminary figures as a number of countries, including highly indebted Ireland and Poland have yet to report their third-quarter figures.

Separately, Eurostat reported industrial production in the eurozone unexpectedly fell by 0.9 percent in September from the previous month. The expectation in the markets was that industrial output would rise by 0.2 percent.

As a result, the year-on-year increase declined to 5.2 percent from 8.4 percent.

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The economic recovery in the 16 countries that use the euro slowed in the third quarter of the year largely on the back of lower growth in Germany, Europe's biggest economy, and an unexpected fall in output in the Netherlands, official figures showed Friday.Eurostat, the...
EU,EU,Economy
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2010-38-12
Friday, 12 Nov 2010 02:38 PM
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