Germany, France haul eurozone out of recession in second quarter

By Martin Santa ,Reuters

BRUSSELS — The economies of Germany and France grew faster than expected in the second quarter, bettering a widely heralded expansion in the United States and pulling the eurozone out of a 1-1/2 year-long recession. The increased pace was primarily driven by renewed business and consumer spending in the 17-country bloc’s two largest economies. The eurozone economy was fragile overall, however, with some countries, notably Spain and Italy, still struggling.

European Economic and Monetary Affairs Commissioner Olli Rehn said the data released on Wednesday showing 0.3 percent eurozone growth for the three months to June meant a nascent recovery was on a more solid footing. But he said there was no room for complacency and that maintaining pace depended on “avoid(ing) new political crises and detrimental market turbulence.” The eurozone has been in a debt crisis for more than 3-1/2 years. Germany, the bloc’s economic powerhouse, grew 0.7 percent, its largest expansion in more than a year, thanks largely to domestic private and public consumption.

France’s economy expanded 0.5 percent, pulling out of a shallow recession to post its strongest quarterly growth since early 2011. The turnaround was driven by consumer spending and industrial output, although investment dropped again. French and German growth compared with a second-quarter expansion of around 0.4 percent in the United States, considered one of the bright spots of the global recovery. Improvement was noticeable elsewhere in the bloc. Bailed-out Portugal’s GDP leapt 1.1 percent in the quarter, its strongest in almost three years, due to higher exports and the easing of a previous investment slump.