The EU and the Eurozone narrowly dodged a second recession in three years, with better than expected growth in Germany masking continuing weakness elsewhere on the continent.
Initial readings on gross domestic product, the broadest measure of an economy’s health, released Tuesday showed Germany’s economy grew 0.5% in the first quarter, an improvement from the decline of 0.2% at the end of 2011.
The growth in Germany was enough to have GDP in the 27-nation EU and the 17-nation eurozone that uses the common currency both remain unchanged compared to the previous quarter, following a 0.3% decline on that basis at the end of last year. Economists had forecast that both would fall into recession with another quarter of falling GDP.
Eleven EU 11 countries remain in recession, however, including Italy, where GDP fell by 0.8 per cent in the first quarter. In Greece, meanwhile, coalition talks collapsed less than two weeks after national elections were held.
(A) spokesman for President Karolos Papoulias said the process of seeking a compromise had been declared a failure and a new vote must be held.
He did not immediately give the date for the new vote, but elections rules suggest it will be in mid June. A caretaker government would be formed on Wednesday, the spokesman said.
“For God’s sake, let’s move towards something better and not something worse,” Socialist party leader Evangelos Venizelos told reporters after the meeting. “Our motherland can find its way, we will fight for it to find its way.”