European recession deepened in first quarter

European recession deepened in first quarter
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First Published: Fri, May 15 2009. 01 49 PM IST
Updated: Fri, May 15 2009. 01 49 PM IST
Paris: Europe sank deeper into recession in the first quarter of this year, official GDP readouts showed on Friday, as tumbling German exports and business investment plus another drop in French economic output accelerated the pace of a year-old contraction in the region.
Governments and investors hope the worst of the first global recession since World War Two may soon have passed, if not already, and the news from Europe confirmed in any case the first three months of 2009 was dire.
“The latest ugly GDP figures should, however, mark the trough of the current “Great Recession”, Alexander Koch, an economist at UniCredit bank, said after the worst of the data came out of Europe’s biggest economy.
German GDP fell more than any quarter since reunification of the country in 1990, with GDP falling far more than forecasters had even imagined, diving 3.8% from the last quarter of 2008, official statistics showed.
French GDP slid heavily too if less dramatically - by 1.2% compared to the previous, official figures showed.
First-quarter GDP estimates for the euro zone and the wider 27-country European Union were due from the EU statistics office later on Friday and seen showing a contraction of 2.0% or thereabouts after a drop of 1.6% the previous quarter.
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 29 April.
The drop of 6.1% in the US method of counting equates to a fall of a bit more than 1.5% in European measures, suggesting the first quarter there, while bad, was not quite as bad as in Europe.
Britain, which is not in the euro zone but depends heavily on its euro neighbours for trade, reported a biggest quarterly GDP drop since 1979 in the first quarter, when GDP drtopped 1.9% from the previous quarter. That estimate was issued on 24 April.
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 the drop eased in the United States from the preceding quarter while it accelerated in the euro zone and Britain.
More detailed information on GDP is expected on 20 May from Germany and many other mainland European countries as well as a first estimate from Japan, though polls of economists say Jpanese GDP could have been the worst since World War II in the opening quarter of 2009.
Global GDP is expected to contract 1.9% in 2009 as a whole, according to the International Monetary Fund, which sees US GDP dropping 2.8%, euro zone GDP 4.2%, Japanese GDP 6.2% and British GDP 4.1%, alongside a slowing in China to 6.5% from 9% last year.
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First Published: Fri, May 15 2009. 01 49 PM IST
More Topics: Economy | Europe | GDP | Recession | Markets |