Recent Updates

  • New Zealand: Performance of Service Index, Composite PMI (Nov)
  • Iran: Monetary & Credit Aggregates (Oct)
  • Israel: Job Vacancy Survey (Nov)
  • China: 70-City Property Prices (Nov)
  • Serbia: Labor Cost Index (Q3); CPI (NOV)
  • Czech Republic: Mortgage Loans (Q3)
  • more updates...

Economy in Brief

EMU GDP Weakens For Many But Overall Holds At Zero
by Robert Brusca  May 15, 2012

Walking a very fragile and thin line, EMU posted no decline in GDP year-over-year or quarter-to quarter by eking out zeros in each measure. Among the key early reporting members Cyprus, Italy, The Netherlands, Portugal and Spain posted GDP declines in 2012-Q1. Germany, Belgium and EMU ‘rebounded' from a negative growth quarter to avoid a rule-of-thumb recession designation. France had been expected to slip into the below-zero-club but has managed to avoid it.

Still the graphic for the Big Three EMU economies shows the real downward pressure on GDP growth among the region's biggest economies.

The problems in the peripheral economies are still raging and there has been some contagion as well. In EMU, having posted a better quarter than expected is no panacea. We will have to see if the results stand up to revisions. Then we will have to see what these countries can do armed with an ideology of austerity to get themselves out of this funk. One possibility is to do nothing and rename it the funkadelic zone.

In Greece the leftist party is unwilling to compromise since it wants to force another election where it thinks it will win even more seats. That might happen. But it might not. I can only wonder what the Greece people will vote for now that they see that empowering the left has only lead to stalemate and after seeing that Europe is not giving in to it. The real choice is to go for austerity or leave the euro. So far Greeks have been confused since so many want to get out from under austerity but they also want to stay in the euro. I do not see the next Greek election with such clear cut results as voters ponder the realities.

As for the rest of EMU, Spain and Italy are dealing with more difficult times. Portugal's Q4 GDP disaster was not repeated in 2012-Q1 and it is the only European county in the table for which year-over-year GDP growth did not decelerate compared to the previous quarter's growth. But, numbers aside the zone is still very weak and fragile.

While some of the GDP numbers were not as bad as expected and EMU itself dodged a bullet in terms of avoiding a negative GDP result, the slowing and the pain and the challenges in Europe remain. There is nothing really in these numbers that is very encouraging.

Euro-Area & Main G-10 Country GDP Results
  Quarter over Quarter-SAAR Year/Year
GDP Q1-12 Q4-11 Q3-11 Q1-12 Q4-11 Q3-11 Q2-11
EMU 0.0% -1.2% 0.6% 0.0% 0.7% 1.3% 1.6%
Belgium 1.2% -0.2% 0.0% 0.5% 1.2% 1.8% 2.2%
Cyprus -1.2% -1.2% -3.2% -1.4% -0.8% -0.2% 1.4%
France 0.2% 0.3% 1.1% 0.3% 1.2% 1.5% 1.7%
Germany 2.1% -0.7% 2.3% 1.2% 2.0% 2.7% 2.9%
Italy -3.2% -2.6% -0.8% -1.3% -0.4% 0.4% 1.0%
The Netherlands -0.6% -2.6% -1.7% -1.1% -0.2% 1.2% 1.8%
Portugal -0.1% -5.0% -2.5% -2.2% -2.8% -1.9% -1.1%
Spain -1.2% -1.1% 0.1% -0.4% 0.3% 0.8% 0.8%
UK -0.8% -1.2% 2.5% 0.0% 0.4% 0.3% 0.3%
US 2.2% 3.0% 1.8% 2.1% 1.6% 1.5% 1.6%
close
large image