Eurozone set to stay weak all year, says OECD

Tim Wallace
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THE EUROZONE economy took a fresh beating yesterday, with Italy confirming a sharp fall in GDP in the first quarter and the OECD’s leading indicators pointing to low growth persisting for the rest of the year.

However official data in France showed a surprise rise in industrial production in April, defying expectations of another monthly fall.

Italian GDP fell 0.8 per cent in the first quarter, and is now down 1.4 per cent on the first quarter of 2011.

Private consumption fell one per cent on the quarter while public spending rose 0.4 per cent, leaving a 0.6 per cent fall in domestic demand.

However, external demand also dropped – exports fell 0.6 per cent on the quarter, hitting growth.

Meanwhile the OECD’s leading indicators, which analyse forward-looking data such as consumer confidence and job expectations to forecast growth in six months’ time, show low growth will persist across Europe.

Its Eurozone index held steady at 99.6, Germany’s stayed at 99.4 and France’s held at 96.6, while Italy’s slid from 99.2 to 99.1.

Any reading below 100 shows growth below the long-run average.

France’s industrial sector was a bright spot, recording a 1.5 per cent rise in production in April, rebounding from March’s one per cent fall.

However, analysts warned this should not be taken as an indication of a turning point in the crisis.

“High unemployment in France, the reduced competitiveness of French companies and fiscal tightening across Europe will continue to weigh on production,” warned Barclays.