France and Germany out of recession

12 April 2012

The economies of France and Germany have come through the recession, according to latest figures.

Both countries saw growth of 0.3% in the second quarter of this year.

The growth helped ensure that the economy of the euro zone as a whole shrank by only 0.1% in the second quarter.

And there was more good news from the US Federal Reserve, which said the world's largest economy appeared to be "levelling out" from its worst recession in decades.

The German economy - Europe's largest - saw its first growth since the first quarter of 2008, marking the end of the country's worst recession since the Second World War.

Economists had predicted a drop of 0.2% in the quarter and UniCredit analyst Andreas Rees called the growth "surprisingly strong", especially after the last quarter's record-high 3.5% decline. But the economy of the world's largest exporter remains weak and despite the positive news, it is still expected to shrink sharply for the full year.

Mr Rees said the car sector had seen a "massive pickup" in Germany thanks to scrappage schemes introduced in several European countries, giving consumers incentives to trade in old cars.

The French economy received a big boost from exports, according to government estimates. "France is finally coming out of the red," finance minister Christine Lagarde said. She said the development "distinguishes France among developed economies".

The growth in the second quarter follows a 1.2% contraction in the first quarter. Like Germany, the new figures marked France's first economic growth since the first quarter of 2008.

While that means the recession is technically ended, the expansion is still small and Ms Lagarde warned that the labour market would remain tight in the coming quarters. An overall drop in gross domestic product for 2009 of 2.4% is still being predicted.

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