#1 major economies contract
Posted: Thu Aug 14, 2008 3:47 am
BBC
The German economy, Europe's largest, shrank by 0.5% in the second quarter compared with the first three months of the year, the first decline since 2004.
And in both France and Italy GDP shrank by 0.3% in the second quarter.
The downturn was largely driven by a decline in exports and a slowdown in consumer spending.
SECOND QUARTER GDP GROWTH
Germany: -0.5%
France: -0.3%
Italy: -0.3%
Spain: +0.1%
Austria: +0.4%
Source: Government statistics
Exporters have been affected by the strength of the euro, which makes their products more expensive overseas, and a more general slowdown in global demand.
French finance minister Christine Lagarde, said the decline in the French economy in the second quarter "mostly reflects the deterioration of our international context, which particularly weighed on our exports and which is common to all European countries".
"The fundamentals of the French economy are healthy," she added.
Recession worries
A German finance minister said its economy could contract again in the next quarter which would mean Germany was officially in recession.
"At the moment that cannot be ruled out," said deputy economy minister Walther Otremba.
Germany was once seen as the main driver of growth in the eurozone.
However exporting companies, such as Berlin-based manufacturer Witels Albert, are cutting back after seeing orders decline in the last few months, especially from the US.
"There is a slowdown in the industry and one of the main reason is the rise in oil price," chief executive Horst Schneidersreit, told BBC News.
"We have seen this in our own company. Our orders have slowed down."
Despite the sharp slowdown in the second quarter in Germany, the government said it still expected GDP growth of 1.7% this year.
Spain was the only one of the major eurozone economies to see its economy expand between April and June. It grew by 0.1% compared with the previous quarter.
[/quote]
BBC
[url=The fifteen economies of the eurozone contracted by 0.2% between April and June, heightening fears that the euro area is sliding towards recession.The fifteen economies of the eurozone contracted by 0.2% between April and June, heightening fears that the euro area is sliding towards recession.
The German economy, Europe's largest, shrank by 0.5% in the second quarter compared with the first three months of the year, the first decline since 2004.
And in both France and Italy GDP shrank by 0.3% in the second quarter.
The downturn was largely driven by a decline in exports and a slowdown in consumer spending.
SECOND QUARTER GDP GROWTH
Germany: -0.5%
France: -0.3%
Italy: -0.3%
Spain: +0.1%
Austria: +0.4%
Source: Government statistics
Exporters have been affected by the strength of the euro, which makes their products more expensive overseas, and a more general slowdown in global demand.
French finance minister Christine Lagarde, said the decline in the French economy in the second quarter "mostly reflects the deterioration of our international context, which particularly weighed on our exports and which is common to all European countries".
"The fundamentals of the French economy are healthy," she added.
Recession worries
A German finance minister said its economy could contract again in the next quarter which would mean Germany was officially in recession.
"At the moment that cannot be ruled out," said deputy economy minister Walther Otremba.
Germany was once seen as the main driver of growth in the eurozone.
However exporting companies, such as Berlin-based manufacturer Witels Albert, are cutting back after seeing orders decline in the last few months, especially from the US.
"There is a slowdown in the industry and one of the main reason is the rise in oil price," chief executive Horst Schneidersreit, told BBC News.
"We have seen this in our own company. Our orders have slowed down."
Despite the sharp slowdown in the second quarter in Germany, the government said it still expected GDP growth of 1.7% this year.
Spain was the only one of the major eurozone economies to see its economy expand between April and June. It grew by 0.1% compared with the previous quarter.
The German economy, Europe's largest, shrank by 0.5% in the second quarter compared with the first three months of the year, the first decline since 2004.
And in both France and Italy GDP shrank by 0.3% in the second quarter.
The downturn was largely driven by a decline in exports and a slowdown in consumer spending.
SECOND QUARTER GDP GROWTH
Germany: -0.5%
France: -0.3%
Italy: -0.3%
Spain: +0.1%
Austria: +0.4%
Source: Government statistics
Exporters have been affected by the strength of the euro, which makes their products more expensive overseas, and a more general slowdown in global demand.
French finance minister Christine Lagarde, said the decline in the French economy in the second quarter "mostly reflects the deterioration of our international context, which particularly weighed on our exports and which is common to all European countries".
"The fundamentals of the French economy are healthy," she added.
Recession worries
A German finance minister said its economy could contract again in the next quarter which would mean Germany was officially in recession.
"At the moment that cannot be ruled out," said deputy economy minister Walther Otremba.
Germany was once seen as the main driver of growth in the eurozone.
However exporting companies, such as Berlin-based manufacturer Witels Albert, are cutting back after seeing orders decline in the last few months, especially from the US.
"There is a slowdown in the industry and one of the main reason is the rise in oil price," chief executive Horst Schneidersreit, told BBC News.
"We have seen this in our own company. Our orders have slowed down."
Despite the sharp slowdown in the second quarter in Germany, the government said it still expected GDP growth of 1.7% this year.
Spain was the only one of the major eurozone economies to see its economy expand between April and June. It grew by 0.1% compared with the previous quarter.
[/quote]
BBC
BBCThe Japanese economy contracted by 0.6% between April and June, prompting fears that it is sliding towards recession.
Declining exports and consumer demand were behind the fall - the first for more than a year - which came after a rise of 0.8% in the previous quarter.
With consumer confidence at record lows, private consumption, which accounts for half of GDP, fell by 0.5%.
Some economists believe the economy will contract in the next three months, partly due to the slowdown in the US.
An economy is considered to be officially in recession after two consecutive quarters of negative growth.
"The data gives the impression that the economy has entered a recession and I think it is in recession," said Takahide Kiuchi, chief economist at Nomura Securities.
GDP, the total value of goods and services in the economy, shrank by 2.4% between April and June, compared with the same period in 2007.
That is a significant change from the first quarter between January and March, when the economy grew by 4% compared with a year earlier.
Figures released last month showed consumer confidence in Japan fell to its lowest level for 26 years in the quarter to June.
As in many economies around the world, rising costs for energy and food have damaged confidence and made consumers reluctant to spend, particularly on more expensive durable goods.
Oy. By the way, those of you tempted to cheer at Euro misfortune... Don't think it won't effect you. After all our "misfortune" played a large part in creating theirs.The pound has sunk to 22-month lows against the dollar after the Bank of England's inflation report warned the UK could be heading for a recession.
Sterling sank more than 3 cents to $1.8769 in the wake of the report.
While the report said growth would be "broadly flat", Governor Mervyn King said there was a possibility that output may fall.
Recent official figures have already shown the UK is struggling with high inflation and faltering growth.
The pound also fell against the euro to as low as 1.259 euros following the news, before settling around the 1.26 euro mark.
Meanwhile, concerns about European growth have also helped the dollar bounce back from record lows.
The euro recovered slightly against the dollar after Tuesday's falls to stand at $1.4916, well off lows of $1.6038 hit last month.
Commodity boost
The US economy is still suffering from the credit crisis but analysts say the deteriorating outlook elsewhere in the world has buoyed the currency's standing.
The falling price of commodities, which are priced in dollars, has also helped the US currency. Investors had bought oil and gold to protect against dollar weakness but they are now unwinding those positions.
The euro has been further undermined by military conflict in Georgia that could disrupt European markets.
However, analysts cautioned that the dollar's rally might not be sustainable.
"The scope for a much faster recovery in the dollar is still limited by relatively poor economic fundamentals in the US," said Julian Jessop, chief international economist at Capital Economics.