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European nations diverge Fresh numbers today highlight how Europe has deteriorated into a region of haves and have-nots.
That the 17-member euro zone overall narrowly escaped a recession – economic growth in the first quarter was flat – is virtually meaningless. The monetary union was saved from a second quarter of contraction because of a stronger-than-expected showing in Germany, the continent's powerhouse.
On a nation-by-nation basis, the differences could not be more extreme, according to the measures of gross domestic product reported by Eurostat and other statistics agencies.
Growth in Germany was strong, at 0.5 per cent, but Greece, which is in the midst of a debt crisis and struggling under high unemployment, suffered a decline of 6.2 per cent, marking the 13th quarter of contraction over more than three years.
Italy saw its economy shrink by 0.8 per cent, Spain by 0.3 per cent, and Portugal by 0.1 per cent. Growth was flat in France.
The numbers came just before talks aimed at cobbling together a coalition government in Greece failed, meaning another election in mid-June. Across the wider 27-member European Union, the Czech Republic's economy withered by 1 per cent, Hungary's by 1.3 per cent. Finland, Estonia, Latvia, Austria and Slovakia registered growth.
"The flat euro zone GDP was a bit better than consensus expectations but the fact that we haven't had confirmation of a technical recession yet, i.e. two successive quarters of contraction, is academic and doesn't really change anything," said senior economist Krishen Rangasamy of National Bank Financial.
"The euro zone data is an average of 17 countries. One country is doing well, some are either heading for or are in recession, while a couple are bordering a depression with unemployment rates close to or above 20 per cent," he said in a research note, referring to nations such as Greece and Spain.
"The second quarter is expected to be a similar story, with Germany again leading the way as it continues to benefit from an undervalued currency, while others stagnate. Austerity in the periphery just means that the recession in those economies will persist for longer."
Going forward, Europe is expected to remain in the doldrums, though, again, with sharp differences among its individual nations.
"It is important to remember that while a better outcome than had been expected, this does not speak to the staying power of growth in the region, and concerns will continue with good reason as the year progresses," said Mark Chandler, chief of fixed income and currency research at RBC Dominion Securities.
The countries most in the crosshairs, of course, are Greece and Spain, where unemployment is crippling and unemployment among young people is at half the work force.
Europe's troubles, amid a debt crisis that has run for more than two years, are playing out in several ways. The region has been hit by strikes, protests and riots, while several governments have fallen.
- Euro zone avoids recession as Germany powers ahead
- How close is Greece to bolting the euro zone?
- Brian Milner's Economy Lab: Greece won't quit euro soon
Facebook boosts price Changes to Facebook's IPO pricing show just how hot the initial public offering is expected to be.
The social media powerhouse today boosted the price range for its initial public offering to between $35 and $38. That top end would put the value of the company at more than $100-billion (U.S.).
The previous range was $28 to $35.
Facebook plans to go public on Nasdaq by selling 180 million shares, while existing stockholders sell 157.4 million more.
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