Germany and France climb out of recession as Q2 growth rises

Paris/Berlin  - German and France climbed out of recession according to second quarter figures, with the 16-member eurozone's two biggest economies reporting Thursday a surprise pickup in growth in the three months to the end of June.

The national statistics offices said the economies in both France and Germany expanded by 0.3 per cent during the second quarter of 2009 as a result bringing to an end the worst recession that has hit the two countries since the Second World War.

Economists had forecast that both the German and French economies would contract by 0.2 per cent in the second quarter before growth gradually gained traction during the second half of the year.

But helping to drag down the overall eurozone's second-quarter economic performance was Italy with the currency bloc's third biggest economy posting last week its fifth consecutive quarterly contraction.

Slumping consumer spending and exports resulted in the Italian economy shrinking by 0.5 per cent quarter on quarter in the three months to the end of June, the Rome-based statistics office said.

But this was less than the 0.7-per-cent contraction economists had predicted.

The surprise positive growth rates in Germany and France comes after the eurozone's two biggest economy tumbled into recession during the second half of last year as the global economic slowdown triggered by a meltdown in the US mortgage market took hold.

"The pace of economic contraction is slowing," European Central Bank (ECB) chief Jean-Claude Trichet told his regular monthly press conference following last Thursday's meeting of the ECB's 22-member rate-setting council.

The German and French growth data came just one day after the US Federal Reserve chief Ben Bernanke expressed confidence that the downturn in the giant American economy had levelled off raising the prospects of the nation returning to a positive growth rate in the coming months.

The German statistics office pointed to private and public consumption, construction and net trade as helping to lead the nation out of recession.

Helping to power the French growth rate was a pickup in exports, which rose by 1.0 per cent during the quarter, the Paris-based statistics office said.

But while the German statistics office revised up its first -quarter growth estimate, the France growth performance in the first three months of the year was revised down marginally.

Releasing the latest GDP data, the Paris-based statistics office revised down the first-quarter slump in the French economy to a 1.3-per-cent contraction.

The French statistics office had initially said France economy had shrunk by 1.2 per cent in the first three months of the year.

Instead of a previously estimated 3.8 per cent, the Wiesbaden-based statistics office said the German economy shrunk by 3.5-per-cent in the three months to the end of March.

But as a reminder of the fragile state of the eurozone economy, the European Union's statistics office Eurostat said Wednesday seasonally adjusted industrial production fell by month on month 0.6 per cent in June. Eurozone industrial output fell by 17 per cent on the year in June.

Moreover, economists have also expressed concern that unemployment in the eurozone will rise in the coming months as the economic fallout from the world recession slowly catches up with the currency bloc's labour market.

Unemployment in the eurozone jumped in June to reach its highest level in a decade, the EU's statistics office said last month.

Seasonally adjusted unemployment rose by 158,000 to push up the jobless rate to 9.4 per cent compared with a 9.3 per cent in May. Eurozone unemployment stood at 6.9 per cent in June 2008. (dpa)