The recovery from recession in the 17-country eurozone continued in the third-quarter of the year — but only just.
Eurostat, the EU’s statistics agency, said on Thursday that the region, which only emerged from its longest-ever recession in the second quarter, posted meager economic growth of 0.1% during the July to September period compared with the previous three-month period. That was in line with market expectations but below the previous quarter’s 0.3% rate.
The figures confirm that the eurozone faces headwinds that will make its recovery a long process that is prone to setbacks. Debt levels, despite years of government cutbacks and tax hikes, remain high in a number of nations, unemployment across the region is at a record high, and consumers are hesitant to reach for their wallets or purses.
As a result, few economists think the recovery in the eurozone can pick up a head of steam and become self-sustaining in the way it has in the United States. In the third quarter, the US grew at an annualised rate of 2.8%, compared with the eurozone’s rate of about 0.4%.
The weak economic backdrop is one reason why the European Central Bank cut its main interest rate last week to a record-low 0.25%.
Thursday’s figures show the recovery has slowed in the core economies, such as Germany and France, while showing mild improvements in some in the so-called periphery, notably in Spain, which saw its nearly two-year recession come to an end.
Germany’s growth slowed to a quarterly rate of 0.3% from 0.7% in the previous three-month period as exports dragged. For an economy that relies heavily on its high-value exporters, such as big car manufacturers like BMW and Daimler, that’s a sign of weak demand among its neighbours and possibly an indication that the recent high value of the euro has taken its toll.
In France, the situation was even more downbeat, with Europe’s second-largest economy after Germany posting a quarterly contraction of 0.1%. It’s not in recession, though, as it grew by 0.5% in the previous quarter — a recession is defined as two consecutive quarters of negative economic growth.
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Japan’s economy slowed in the third quarter as consumer spending remained sluggish despite government efforts to energise growth with public works and lavish monetary stimulus. The government said on Thursday that the world’s third-largest economy grew an annualised 1.9% in the July-September quarter, half the pace of the