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Economy

French Economy Falls Into Recession While Germany Expands By A Fraction

FRANCE 24, BLOOMBERG, REUTERS

Worldcrunch

BERLIN/PARIS – France slipped into recession while Germany’s economy expanded by a fraction, according to European economy data published on Wednesday.

Statistics showed the forecasts for Europe’s two biggest economies were weaker than expected. The German GDP increased about 0.1% from the fourth quarter while the French economy contracted by 0.2%.

According to France 24, France’s situation is the result of weak exports, investments and household spending. A harsh blow for François Hollande’s government – whose austerity policy fails to reassure both consumers and businessmen as unemployment reaches new heights.

Germany’s first-quarter growth was driven by household spending, according to statistics. The country’s recovery was delayed by an unusually long winter, which damped the business and construction confidence. However the Bundesbank is confident that the country’s economy will grow by 0.4% this year and 1.9% in 2014, reports Bloomberg.

For Italy, the euro zone’s third biggest economy, the situation is much worse says Reuters. It shrank more than expected in the first quarter – by 0.5%, extending Italy’s recession to seven straight quarters.

The weaker-than-forecast GDP results in Europe’s two biggest economies highlight the risks to the outlook and indicate that the euro zone is almost certainly still stuck in recession, said Bloomberg. The European Central Bank (ECB) cut its benchmark interest rate to a record low of 0.5 percent this month and President Mario Draghi said the bank is ready to act again if needed.

“The worse-than-anticipated start of the year will clearly worry policy makers at the ECB,” said chief economist at London’s Markit, Chris Williamson.

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