Is the European economy showing signs of recovery? Eurozone growth in the third quarter turned out to be slightly more dynamic than expected, 0.4% more than 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 results.
However, these figures are largely misleading. “We should not take this recovery in the third quarter as a sign of a strong acceleration”warns Riccardo Marcelli Fabiani, of the research firm Oxford Economics. German growth was better than expected in the third quarter, but for the second quarter it was revised downwards, from -0.1% to -0.3%. The most important country in Europe remains stagnant. Of the last six quarters, three have recorded a drop in gross domestic product (GDP).
Added to this are the drawbacks for France: third quarter growth was artificially inflated by a national accounting decision: all television rights and ticket sales for the Olympic and Paralympic Games were recorded during this period. This accounting anomaly will disappear in the fourth quarter, mechanically reducing growth.
Particularly volatile
Another reason to be cautious 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 register their European profits there, artificially concentrating their financial flows there.
Excluding Ireland and France, Capital Economics estimates that growth in the euro zone reached 0.3%, certainly a slight increase from 0.2% in the previous quarter, but still indicating a lackluster economy. A kind of gray Dutch sky, Klaas Knot, governor of the central bank of the Netherlands, said humorously 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 hit the European Commission’s forecast this year of 0.8%.
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