According to official statistics, Germany is also heading towards a recession.
The Utopia of the Seas, built in Saint-Nazaire by Royal Caribbean for the cruise ship operator, added €1bn to the French economy, contributing to a 0.6% increase in trade and 0.3% in gross domestic product in the three-month period ending June.
Eurozone increased by 0.3% during the third quarter, after an initial rate of 0.3% that was revised down to 0.3%. This led many analysts in Europe to claim that the 20 member euro bloc is now on the right track after flirting briefly with recession in 2023.
Spain accelerated its growth with a 0.8% rate of GDP in the second quarter. Meanwhile, Italy maintained its recovery by maintaining a 0.2% increase in GDP.
Germany, the largest economy in the eurozone, has slipped back into contraction.
Pushpin Singh is a senior economist with the Centre for Economic and Business Research. He said that the growth rate in the eurozone was higher than analysts had expected and “suggests that the bloc has changed since the beginning of the year”.
He said: “Prospects will likely improve throughout the year due to recent policy loosening from the European Central Bank, and the expectation of further interest rate reductions down the road.”
Bert Colijn was a senior economist with the Dutch bank ING. He was more worried that German growth could become a major drag on the Eurozone.
“Germany is still the weakest link in the post-pandemic economic recovery, but the rest of the world’s economy isn’t great either.”
“Leave Spain out and you have an economy moving along at a slow growth rate.”
The French economy grew slightly faster than expected, and it could improve further in the third quarter as the Olympics boost consumer spending. This will dispel fears that deadlock in the French Parliament following recent elections might knock the economy out of course.
Bruno Le Maire said that the performance of the economy in the second quarter, and the Paris Games, meant that growth would likely exceed the 1% forecast by the outgoing government.
Le Maire stated that “we will probably see growth in the end, which is higher than the 1% predicted for February.” “For the past two years, France outperformed. Our economic policies are working and giving tangible results.”
He said that the growth was better than expected and could have a positive impact on the budget deficit. France must continue to focus on cutting spending.
Anja SabineHeimann, economist at HSBC Deutschland, stated that industrial orders are weak and German consumers are reluctant to spend. She added that the risks for a recession have “increased”.
Over the last two years, the country’s growth has been almost non-existent. It avoided a possible recession by just a hair.
Heimann stated that many of the elements of a slowdown are now in place.
She added that “domestic and foreign industrial orders are continuing to decline – highlighting a lack of support from the industry in near-term.”
Even after the recent strong nominal wage increases, German households still haven’t recovered their spending power. Consumer prices are nearly a fifth above 2019 levels.
“There is not likely to be an enormous consumer spending spree.”
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