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The Spanish GDP Rebounded in Q3 after Nine Quarters of Contraction

Spain emerged from a two-year recession in the third quarter. Growth was driven by overseas sales as domestic demand fell 0.3%, the Bank of Spain said today. The decline in investment slowed and private consumption grew 0.1% from the previous quarter, when it was unchanged.




These data are positive to the extent Spanish economy represents 12% of the Eurozone economy (real GDP) which implies a positive contribution of 0.012% in Q3. However, Spanish economy is still depending on exports to drive growth as austerity continues to hold back domestic demand. The recent rise of euro against main currencies could weight on GDP in Q4.


More from Bloomberg:


Spain emerged from a two-year recession in the third quarter, strengthening Prime Minister Mariano Rajoy’s efforts to repair the nation’s finances and reduce the 26 percent jobless rate.
Gross domestic product expanded 0.1 percent from the second quarter, when it shrank 0.1 percent, and fell 1.2 percent from a year ago, the Madrid-based Bank of Spain estimated in its monthly bulletin today. The data, which are preliminary, matched the median estimate of 37 economists in a Bloomberg News monthly survey.

Eurozone Emerges from Recession Thanks to France and Germany

The German and French economies grew respectively by 0.7% and 0.5% in Q2 (faster than the US), pulling the Eurozone out of its longest recession.


Eurozone growth was 0.3% from the previous quarter, with its two biggest economies revealing unexpected strength such as Austria (0.2%) and Finland (0.7%). In the meantime, Portugal was the best performer with 1.1% growth due to higher exports. That compared with around 0.4% growth in the quarter (1.7% annualized)  in the United States.


Regarding France, economy posted its strongest quarterly growth since early 2011 supported by consumer spending, industrial output and inventories, although investment component fell gain. At the opposite, German economy posted  its largest expansion in more than a year thanks largely to domestic private and public consumption ahead of elections (September 22).


On the negative side, the recession is worsening in Netherlands (-0.2% QoQ ; -1.8% YoY) and particularly in Cyprus (-1.4% QoQ ; -5.2% YoY) where the contraction could exceed forecast set by European Commission (-6.7% for 2013) and therefore could challenge the bailout program.


Overall, despite some disappointments, Eurozone is on track to technically recover (two positive quarters) in Q3 2013  as several surveys  (Eurozone PMI, Sentix Investor Confidence) show that conditions have improved since the end of June.


Source: Eurostat

Spanish Jobless Figures to be Released Next Week Will be Encouraging

Spanish employment figures to be released next week will be encouraging and the recession has started to turn a corner, Prime Minister Mariano Rajoy told an economic conference on Saturday while several people protested in Madrid:


“I’m not counting chickens here, however I recommend that you pay attention to unemployment and social security numbers on Tuesday the 4th” … “If the patterns we’ve seen are confirmed they will be clearly encouraging”


These data could be encouraging in a context where the situation on the labor market is catastrophic:
1/ Joblessness has increased for seven consecutive quarters, leaving almost 6 million people out of work.
2/ The Spanish unemployment rate reached 27.2% in April according to Eurostat.
3/ Almost one third of unemployed people have been out of work for more than two years.
4/ Two million Spanish households have no one earning a wage.


Regarding the economic trend, these numbers will be published after Spain recorded on May 17 its first monthly trading surplus since 1971 and will confirm that Spanish economy could emerge from recession by the end of the year.

In May, French Consumer Confidence Fell to its Lowel Level Since July 2008

In May 2013, households’ confidence about the economic situation strongly declined, with the French statistics agency, Insee, saying its monthly synthetic confidence index lost 4 points to 79 falling to its lowest level previously reached in July 2008. The figure is well below the long-term average of 100.



This statistic confirms that the recession has persisted in France in Q2 2013 after GDP shrank by 0.2% in Q4 2012 and Q1 2013, according to the EU’s statistics office Eurostat.


Moreover, regarding the labor market, despite earlier this month, France passed a range of measures aimed at stopping the rise in unemployment by reforming the country’s labour laws, the consumer satisfaction survey also shows that French households believe the rate of unemployment in the country will continue to rise beyond France’s current rate of 11 percent.


As a consequence, the French economy, which represents about 20% of the Eurozone, could be a drag in Q2 offsetting the positive effect of Germany.