Eurozone economic growth remains at a snail’s pace, but was stronger than expected in the period from July to September and it seems Greece is out of its six-year long recession.
Data published on a seasonally adjusted basis for the first time since 2011 showed the Greek economy expanded by 0.8 percent in the first quarter. It then grew 0.3 percent in the second quarter and 0.7 percent in the third quarter, Euronews reported.
But Greece has a massive amount of ground to make up, and on the streets people are sceptical that a recovery is underway:
George Hamorousos, a 31-year-old insurance salesman in Athens, said: “We haven’t felt it. Just because they say so doesn’t necessarily mean it’s true. I hope this is the case, but I don’t see it.”
The news is unlikely to provide comfort to jobless Greeks as much faster growth will be needed to create jobs.
And the country’s soup kitchens are still full, with people like Foteini Kyzouli. She will take a lot of convincing that things are getting better: “Figures can be fake, as they were in the past. This does not reflect reality. Reality is not numbers and figures. It is what you can see in a place like this.”
Throughout the 18 countries sharing the euro growth was feeble, up just 0.2 percent from the previous quarter.
Year-on-year, eurozone growth in the third quarter was 0.8 percent, slightly better than economists had expected.
Of the three largest economies, Germany narrowly avoided slipping back into a technical recession with 0.1 percent expansion, France grew 0.3 percent, which was better than expected, while Italy contracted 0.1 percent, its 13th quarter with no improvement.
EU Commission spokeswoman Mina Andreeva gave the view from Brussels: “The figures are a small piece of good news of course, but there is no room for complacency, to strengthen the recovery we will still need decisive policy action on three fronts, and this is credible and growth-friendly fiscal policies, ambitious structural reforms and using all available tools to boost investment in Europe.”
Alongside the growth figures, it was confirmed eurozone inflation was just 0.4 percent in October, way below the European Central Bank’s target of around 2.0 percent.
That prompted fresh calls for stimulus from ECB chief Mario Draghi.
Joe Rundle, Head of Trading at ETX Capital said: “The eurozone has some real structural problems and the one shining light, Germany, seems to be stuttering at the moment. So I think Draghi is certainly going to want a weaker euro and try and get some sort of inflation.”
Lower prices seem likes a good thing, particularly for cash-strapped Europeans, but if people expect prices to fall, they stop spending, which reduces demand, risking deflation and economic stagnation.
That is why France and Italy are pressing the EU for more growth measures – rather than cutting debt – to avoid a slide back into recession.
Germany, the biggest economy, and which has a current account surplus, could spend more, but won’t wear that.
