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Economy in Brief

GDP Edges Higher In EMU GDP Revision
by Robert Brusca June 4, 2010

ยท EMU GDP performed slightly better than expected in 2010-Q1. GDP is now up by 0.6% Yr/Yr the first positive Yr/Yr result since the downturn began. Austria and Italy post the strongest Q/Q numbers in 2010-Q1. Germany and France show the strongest Yr/Yr growth in Q1. The best of the Euro-Area, on this score, trail the US, Japan and Switzerland.

Consumption in Europe continues to falter. Growth in Q1 is substantially about exports. Quite apart from the GDP figure itself Europe needs to get more balanced growth and it needs more home-grown growth. Exports rose at a 10% pace in Q1 as private consumption fell by 0.4%. Domestic demand was up mostly on government spending initiatives.

As the table shows Greece is still under pressure. The hardest thing for Greece is to have to endure a period of fiscal austerity right on the heels of a difficult recession.

Spain has posted positive growth for 2010-Q1 but it too faces fiscal austerity in the quarters ahead plus a lingering problem with its construction sector and the banking problems that have been connected with that. Portugal has not released its Q1 GDP result yet, nor has Ireland.

f there are to be synergies in the Euro-Area its member countries will have to brew home grown prosperity instead of taking it from abroad with export growth. Europe is lacking balance in a number of ways as this financial crisis and its aftermath, the euro-debt crisis, clearly demonstrate. Balance in growth is another factor lacking in the Euro-Area.

Euro-Area and main G-10 country GDP Results
  Quarter Over Quarter-Saar Year/Year
GDP Q1-10 Q4-09 Q3-09 Q1-10 Q4-09 Q3-09 Q2-09
EMU 0.8% 0.5% 1.6% 0.6% -2.1% -4.1% -4.9%
Austria 3.5% 1.3% 2.8% 0.8% -1.5% -3.6% -5.0%
France 0.5% 2.2% 1.0% 1.2% -0.4% -2.6% -3.2%
Germany 0.6% 0.7% 2.9% 1.5% -2.2% -4.8% -5.8%
Greece -3.1% -3.1% -1.9% -2.3% -2.5% -2.5% -1.9%
Italy 2.1% -0.2% 1.5% 0.6% -2.8% -4.7% -6.1%
The Netherlands 1.0% 1.5% 2.3% 0.1% -2.6% -4.0% -5.2%
Spain 0.3% -0.6% -1.1% -1.3% -3.1% -4.0% -4.2%
UK 1.2% 2.0% -1.2% -0.2% -3.1% -5.3% -5.9%
US 3.0% 5.6% 2.2% 2.5% 0.1% -2.6% -3.8%
Japan 4.9% 4.2% 0.5% 4.2% -1.4% -4.8% -6.0%
Switzerland 1.6% 3.5% 2.2% 1.7% 0.2% -1.4% -2.5%
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