Eurozone economy: Germany returns to growth, France slips into recession

PanARMENIAN.Net - Germany's economy crept back into growth in the first quarter of the year after a sharp contraction at the end of 2012, while France slipped into recession, data showed on Wednesday, May 15, according to Reuters.

Italy, the euro zone's third largest economy, reported its seventh consecutive quarter of decline. Germany grew by a weaker than expected 0.1 percent on the quarter, just skirting recession itself as a harsh winter prevented a stronger rebound and also hampered by the ills of its euro zone peers.

"The German economy is only slowly picking up steam," the Statistics Office said in a statement. "The extreme winter weather played a role in this weak growth.

France entered a shallow downturn - its first in four years - after contracting by 0.2 percent in the first three months of the year, as it did in the last quarter of 2012.

The euro fell to a six-week low against a buoyant dollar, hurt by the anemic figures which traders said kept alive chances of more monetary easing by the European Central Bank. The ECB cut rates to a record low earlier this month and its head, Mario Draghi, said it was ready to act again if the economy worsened.

For Italy, the euro zone's third biggest economy, the situation is far worse. It shrank by more than expected in the first quarter, by 0.5 percent, extending the country's recession to seven straight quarters and making it the longest since quarterly records began in 1970.

Elsewhere in the currency area, the Dutch reported a 0.1 percent contraction in GDP, remaining in recession, Austria's economy flatlined in the first quarter and Finland shrank by 0.1 percent, entering a technical recession in the process.

The euro zone's problems also stretched beyond its borders, helping drag the Czech Republic's economy into a far deeper recession than expected.