German economy slows, France picks up, recession hits Greece

While Germany underperforms in first quarter, French economy posts its fastest economic growth in two years and Greece economy falls back into recession

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Europe’s largest economy, Germany, disappointed markets by growing only 0.3 percent in the first quarter, below the 0.7 percent growth of the last quarter of 2014. On the other hand, the lagging French economy showed signs of recovery by beating market expectations and growing 0.6 percent. 

Consumer spending, corporate investment, industrial output and inventories contributed positively to the stronger than expected growth rate in France. 

While in Germany, although public and private consumption, investment in construction and equipment supported the economy in the first quarter, imports rose more than exports, causing a slowdown in the export-oriented country. 

In a separate report, the German Federal Statistics Office released inflation data, which showed the consumer prices index rose by 0.5 percent in April, up from 0.3 percent in March. 

Weak euro, monetary easing implemented by the European Central Bank and falling oil prices are the main driver of economic recovery in the eurozone. 

However, the first quarter has been tough for Greece, as the country switched to an anti-austerity leftist government at the beginning of this year. The ongoing dispute between Greece and its creditors caused political uncertainty, leading the country back into recession by shrinking 0.2 percent in the first three months. 

The eurozone economy grew by 0.4 percent in the first quarter, a slightly weaker than the 0.5 percent expectation, due to the slower growth in Germany. However, it marked the fastest growth in almost two years. 

Upon news, European stocks have been performing well. Europe’s main stock indexes are all higher, with CAC 40 leading with a 1.30 percent gain, while Germany’s DAX gained 0.7 percent.

TRTWorld and agencies