2024-10-30 15:36:00
Is the European economy showing signs of recovery? Growth in the euro zone in the third quarter turned out to be slightly more dynamic than expected, up 0.4% compared to the previous quarter, according to data from the Eurostat institute published on Wednesday October 30. Even Germany, a currently ailing country, is regaining some color, with growth of 0.2%, partly thanks to household consumption. France (0.4%) and especially Spain (0.8%) also show apparently solid performances.
However, these figures are largely misleading. “We should not take this recovery in the third quarter as a sign of a robust acceleration”warns Riccardo Marcelli Fabiani, from the research firm Oxford Economics. German growth was better than expected in the third quarter, but it was however revised downwards for the second quarter, from – 0.1% to – 0.3%. The most important country in Europe is still stagnating. Of the last six quarters, three have recorded a decline in gross domestic product (GDP).
We must also add downsides for France, the third quarter growth being artificially inflated by a national accounting decision: all television rights and ticket sales for the Olympic and Paralympic Games were recorded over this period. This accounting anomaly will disappear in the fourth quarter, mechanically reducing growth.
Particularly volatile
Another reason for caution is that growth in Ireland showed an impressive 2% increase in the third quarter alone, but this figure is of little significance. The GDP of this small country of five million inhabitants is particularly volatile, because it depends on the way in which a handful of American multinationals record their European profits there, artificially concentrating their financial flows there.
By removing Ireland and France, the firm Capital Economics calculates that growth in the euro zone reached 0.3%, certainly a slight increase compared to 0.2% in the previous quarter, but still indicating a mediocre economy. A sort of gray Dutch sky, Klaas Knot, the governor of the central bank of the Netherlands, said with humor on October 28: “The situation is like the weather in October in Amsterdam, not great but not as bad as people say. » Overall, growth is on track to reach the European Commission’s forecast this year, at 0.8%.
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**Interview with Riccardo Marcelli Fabiani, Economist at Oxford Economics**
**Interviewer:** Good afternoon, Riccardo! Thank you for joining us today to discuss the recent economic developments in Europe.
**Riccardo:** Good afternoon, thank you for having me.
**Interviewer:** The latest data shows a slight recovery in the Eurozone with 0.4% GDP growth in Q3 2024. How significant is this growth?
**Riccardo:** While the growth figures are encouraging, we should be cautious about interpreting them as signs of a robust recovery. It’s important to remember that this growth comes after a period of stagnation, and the underlying issues in major economies like Germany remain.
**Interviewer:** That’s a fair point. Germany’s figures indicate a growth of just 0.2%. Given its economic significance, what does this mean for the Eurozone as a whole?
**Riccardo:** Germany is indeed the linchpin of the Eurozone economy. While the 0.2% growth is better than previous expectations, it masks deeper issues. The downward revision of Q2 growth from -0.1% to -0.3% signals ongoing challenges for the German economy, particularly in terms of industrial output and investment.
**Interviewer:** Other countries like Spain, however, are showing stronger performance, with a growth rate of 0.8%. What’s driving this success?
**Riccardo:** Spain’s performance can largely be attributed to its booming tourism sector, which has rebounded significantly post-pandemic. This highlights how different sectors can react differently to economic conditions. That said, while Spain is thriving, it doesn’t single-handedly compensate for the broader issues in the Eurozone.
**Interviewer:** So, what should we take away from these recent developments?
**Riccardo:** The figures should not create false optimism. While there are signs of recovery, we need structural changes and sustained growth to ensure that the Eurozone is not pushed back into stagnation. Caution, rather than complacency, is crucial at this stage.
**Interviewer:** Thank you, Riccardo, for your insights. It seems that while there are positive signs, vigilance is essential for navigating the Eurozone’s economic landscape.
**Riccardo:** Exactly, thank you for having me.
