Growth spurt ends as GDP set to shrink

Tim Wallace
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GDP GROWTH across the Eurozone slowed in the third quarter and although France and Germany both posted healthy figures yesterday, economists expect contraction to take hold from the last three months of 2011.

The Eurozone grew by 0.2 per cent over the three months to September, which amounts to growth of 1.4 per cent when compared with the same period of 2010.

Portugal, Cyprus and the Netherlands contracted in the third quarter by 0.4 per cent, 0.7 per cent and 0.3 per cent respectively. Spain, and Belgium experienced no growth.

France and Germany experienced healthy 0.4 per cent and 0.5 per cent expansions – though economists say such growth will not last.

“This could be the last bit of good news for some time in the Eurozone,” said Lombard Street Research’s Jamie Dannhauser.

“The question is not whether the Eurozone will be in recession next year, but how deep that recession turns out to be.”

Such a gloomy outlook was backed up by the German ZEW index of economic expectations, which fell sharply to minus 55.2 in November from minus 48.3 in October, its ninth consecutive monthly decline.

The survey asks analysts how optimistic they are about the economy’s state in six months’ time, with its historical average standing at 25.0 points.

OECD employment data added to evidence that economic growth peaked in the summer.

The unemployment rate crept up from 10.1 per cent in August to 10.2 per cent in September, with Italy experiencing the largest jump in joblessness, rising from eight per cent to 8.3 per cent.