Germany, France, Italy suffer dramatic GDP falls | business | Hindustan Times
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Germany, France, Italy suffer dramatic GDP falls

business Updated: Feb 13, 2009 15:33 IST

Germany's economy suffered a record slide in the final quarter of last year and France shrank at the fastest pace in 34 years, suggesting grim forecasts for euro zone GDP, due later on Friday, could be too optimistic.

Italy provided no respite its economy declined by 1.8 per cent on the quarter, significantly worse than forecasts for a 1.2 per cent slide and the biggest drop since at least the start of the data series in 1980.

German gross domestic product shrank a bigger than expected 2.1 per cent quarter on quarter, its worst quarterly performance since reunification in 1990, preliminary data showed.

Economists polled by Reuters last week had forecast GDP would drop by 1.8 per cent on the quarter.

French GDP fell 1.2 per cent quarter on quarter. Economists had predicted a drop of 1.1 per cent.

"These are huge contractions in Europe, the largest in living memory in most cases," said Ken Wattret, economist at BNP Paribas.

The French figures were published on Thursday, a day early, after a group of statisticians leaked them in protest at the government's early announcement of some data.

A separate report showed French job creation fell 0.6 per cent quarter on quarter, as companies cut workforces.

French Economy Minister Christine Lagarde said she expected a tough 2009. "We will have a difficult year. I think growth will be lower than 1 per cent," she told RTL radio.

Broader euro zone data are due at 1000 GMT with analysts saying risks to the forecasts of a 1.3 per cent contraction in the fourth quarter are now skewed firmly to the downside.

Germany, Britain and the euro zone are already officially in recession as are the United States and Japan. Anaemic French growth in the third quarter officially keeps it just out of the clutches of recession.

Other statistical releases showed Dutch GDP shrank 0.9 per cent on the quarter while the Austrian economy sagged by 0.2 per cent, the first fall in nearly eight years.

Augmenting the raft of bleak figures, Spanish data on Thursday showed its economy shrank by one per cent, its fastest pace in 15 years, pushing it into recession for the first time since 1993.