Last week the European statistical office, Eurostat, announced the exit from recession of France and Germany after four negative quarters. Both Paris and Berlin saw their economies grow by 0.3% on a quarterly basis in the second quarter of 2009.
The recovery follows their worst quarter since the beginning of the crisis. In the first three months of the year, France's GDP fell by 1.3% and Germany’s by 3.5%.
Although the quarterly figures are coupled with heavy losses on an annual basis (-5.9% for Germany and -2.6% for France), the new data was nevertheless viewed as a positive surprise by many observers.
"The data is very surprising. After four negative quarters France is finally coming out of the red," French Economy Minister Christine Lagarde told RTL radio.
Some analysts hastened to see in these figures the beginning of the end of the crisis for the euro zone and the rest of Europe.
"The recession has ended. Not just in Germany. The post-Lehman global confidence shock has receded. Firms are investing again," said Joerg Kraemer from Commerzbank, quoted by Reuters.
Recession remains widespread
However, the first signs of recovery for France and Germany are not reflected in the performances of other EU member states. Quarterly GDP fell by 0.1% in the Eurozone and by 0.3% in the EU. Recession slowed down in almost all EU member states but remained staunchly negative, especially in Eastern European countries.
Lithuania was the only country recording a fall in GDP worse than in the previous quarter. Vilnius’ economic decline hit 12.3% between April and June.
In Estonia, Hungary and Romania the fall is still steep but less pronounced compared to the first quarter of 2009. Estonia recorded -3.7% on a quarterly basis after a 6.1% fall in the previous three months. Hungary’s recession slowed down from -2.6% to -2.1%, while Romania’s slowed from -4.6% to -1.2%.
Slovakia meanwhile recorded a marked recovery, recording 2.2% growth on a quarterly basis after a -11% GDP decline in the first three months of the year. However, seen on an annual basis, the fall is still at -5.3%.
Spain remains the sickest member of the Eurozone with GDP dropping 1% quarter-on-quarter - slightly more than a Bank of Spain forecast of 0.9% - and contracting 4.1% year-on-year, the sharpest fall since comparative data began in 1977.
"We do expect Spain to do worse than other European countries for a few years ... (Germany and France) don't have the same imbalances as Spain, which means we expect it to stay weaker, for longer," Dominic Bryant, an economist at BNP Paribas told Reuters.
Unemployment to grow
The positive signs coming from France and Germany should not be considered as heralding the end of the recession, warned the general secretary of the European Trade Union Confederation (ETUC) John Monks.
"The harsh facts are that even on the most optimistic interpretations, European unemployment will continue to rise well into 2010", he said in a statement.
"Already school and college leavers are experiencing a huge fall in available opportunities and temporary short time working schemes are nearing the end of their life. No-one can afford complacency or self congratulation, when the need is to inject more growth and more jobs into the economy", he concluded.