Friday, May 15, 2009

Q1 2009 GDP in Germany, France, Spain

The GDP stats for the first quarter of 2009 (Q1/2009) are in for Germany, France as well as Spain.
a) France. The fall/shrinking of the GDP was 1.2% (which is in line with expectations) compared to the previous quarter. Since in Q4/2008 the stat was -1.5%, this has given rise to views that the recession in France "may" be easing. No comment! By the way, the French Economy Ministry expects the French economy to contract by 3% in 2009.
b) Germany: Driven by lagging exports and investment, the GDP drop in Q1/2009 was a record 3.8% (!!), ie the worst GDP performance since re-unification (compared to the previous quarter), yielding a year-on-year drop of 6.7%, against a 6% prediction for the whole year 2009 made by the German government! The Q4/2008 drop, 2.2%, was the previous record low until the stats for Q1/2009 came in!
Is Germany (along with other traditional exports - trade surplus world "champions" economies) paying a price for their over-reliance on exports?
c) Spain: In Q1/2009. GDP fell 1.8% compared to Q4/2008 and shrank 2.9% on a year-on-year basis, based on preliminary data, making this the worst GDP performance since 1959! The Spanish government has predicted a GDP drop of 1.6% for 2009

Spain, which joined the EEC/EU in 1986, enjoyed 14 years of consecutive growth until it entered into recession Q4/2008. It seems that many experts think that Spain has major "economic imbalances" and that this will delay its rebounding. It also seems that the construction industry's major perils are a core driver of the Spanish economic recession.

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