According to the Eurostat figures published today the eurozone economy shrank in the first quarter by 0.2% (q-o-q). French output also fell by 0.2%. As inGermany, investment activity was negative, but in contrast toGermanythere was no support from private consumption and external trade exerted a drag. In our view, economic growth inFrancein 2013 will be close to zero. This does at least distinguish it positively from the other “FISH” countries: Although theNetherlandsregistered “only” a marginal drop of 0.1% on the previous quarter in the first quarter, in 2013 as a whole GDP is likely to slump by 0.7%.ItalyandSpainboth saw a quarter-on-quarter drop of 0.5%, for the year as a whole we see a decline of around 1.5% in both countries. Today’s figures illustrate not least thatGermanyis not really an island of growth in the eurozone (see separate NewsLine).
We expect the eurozone economy to emerge from recession in the second quarter. Yesterday’s industrial production figures provide a good foundation for positive sequential growth in the second quarter. In addition, the drop in inflation on the back of lower energy prices should buoy private consumption. There is also likely to be a rebound from the drag caused by the cold winter. However, the pickup in the economy is likely to be so faint that overall output will decline by an annual average 0.3%. For 2014 we are penciling in growth of around 1.5%.