Euro zone recovery falters in fourth quarter of ’09

* Euro zone GDP up 0.1 pct q/q, down 2.1 pct yr/yr

* Dec industrial production -1.7 pct m/m, -5.0 y/y

* Consumer spending tight as unemployment grows

By Marcin Grajewski

BRUSSELS, Feb 12 (BestGrowthStock) – Euro zone economic recovery
stumbled in last year’s final quarter as gross domestic product
barely expanded, dragged down by a poor German performance
despite healthy figures from France, data showed on Friday.

The 16-country currency area’s GDP edged up 0.1 percent in
the October-December period, compared with the previous quarter,
and contracted by 2.1 percent from the last quarter of 2008,
statistical office Eurostat said in a flash estimate.
[ID:nBRQ009717]

Analysts polled by Reuters had expected quarterly growth of
0.3 percent and a year-on-year decline of 1.9 percent.

Over the whole year 2009, euro zone GDP fell 4.0 percent, in
line with the European Commission’s expectations.

The euro zone figure was dragged down by Germany, the area’s
biggest economy, which stagnated in the final three months of
2009 quarter-on-quarter.

In France, the zone’s second-biggest economy, GDP grew by
0.6 percent, more than expected, driven by robust consumer
spending.

By comparison, the United States economy grew by 1.4 percent
quarter-on-quarter in the same period and by 0.1 percent in
yearly terms.

In the third quarter, the euro zone economy expanded by 0.4
percent quarter-on-quarter.

An uncertain growth outlook is expected to keep the European
Central Bank’s main interest rate at a record low of 1.0 percent
until the fourth quarter of 2010, economists say.

But the bank has already started to pull back the emergency
lending measures introduced during the financial crisis.

Analysts say any recovery from the biggest crisis since
World War Two is likely to be limited, because growing
unemployment is forcing people to keep their spending tight.

The euro zone’s jobless rate rose to 10 percent of the
workforce in December, the highest rate since August 1998.

INDUSTRIAL OUTPUT FALLS

GDP growth will therefore depend on government spending as
tens of billions of euros are pumped into the economy to
stimulate demand, and on companies replenishing their
inventories.

However, deteriorating public finances will sooner or later
force many countries to tighten their fiscal policies as
tensions continue in the euro zone due to financial problems in
Greece and some other countries.

Industrial production figures compounded the gloomy picture.

Eurostat said euro zone production tumbled 1.7 percent in
December from the previous month, defying expectations of
growth, and declined 5.0 percent annually. [ID:nBRQ009716]

It was the biggest monthly decline in industrial production
since February 2009, when the index nose-dived 3.8 percent.

Analysts had expected monthly production to increase by 0.2
percent in December and fall 1.5 percent year-on-year.

However, Eurostat revised up the November production figures
to +1.4 percent month-on-month and -6.9 percent annually from
previous readings of +1.0 percent and -7.1 percent respectively.
Penny Stocks

(Editing by Dale Hudson)

Euro zone recovery falters in fourth quarter of ’09