European Economic Forecast (France, Germany, UK):
Extracts from the press conference by Olli REHN, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro
Première transmission: 07/11/2012
Brussels, Belgium - EC/Berlaymont
Fin de production: 07/11/2012
The French economy has slowed down amid the economic contraction in the euro area in 2012, but has fared better than many of its European peers thanks to relatively resilient domestic demand and in spite of disappointing exports. However, after three quarters of stagnating GDP and historically low levels of corporate profitability, prospects for an imminent recovery have waned. Entrepreneurs, whose confidence has suffered, are expected to scale down their investment and employment plans in the short term.
After a slight decline in the fourth quarter of 2011, German GDP rebounded at the beginning of 2012. An expansion of 0.5% q-o-q (seasonally and working-day adjusted) in the first quarter was followed by lower growth of 0.3% q-o-q in the second quarter. Growth in the first half of the year was driven by both consumption and exports, while the contribution of gross fixed capital formation was negative.
The UK re-entered a recession, technically speaking, in the first quarter of 2012 as this was the second consecutive quarter of negative growth (-0.3%). This was exacerbated in the second quarter of this year with a further decline of -0.4% over the previous three months, driven in large part by the impact of an extra bank holiday in June to celebrate the Queen's Diamond Jubilee.
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||SOUNDBITE by Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro (In French) saying that: For 2012, our growth forecast is of 0.2 % and that is in fact very close to the one of French government which is 0.3%. As regards 2013, we estimate hat economic recovery will be slower than the French government has estimated so we are predicting 0.4% versus 0.8%.
The main difference between the scenarios drives from different ways of taking external factors into account. The authorities expect that a quick recovery in external demand of 2013 will feed into acceleration in investments and domestic demand. We feel that we cannot expect such an improvement until 2014. As a result of this the Commission estimates that domestic demand will remain depressed in 2013.
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||SOUNDBITE by Olli Rehn (In English) saying that: Concerning Germany, It's correct that German growth is relatively solid next year and especially the following year. However, even the German economy does not escape the current slowdown as growth is projective to further weaken in the second half of this year. However, the German economics' fundamentals remain favourable, economic activities expected to be stabilized by private consumption and housing investment given the robust labour market and rather high rate of employment. Given the significant rate increases and also low interest rates, investments in equipment as well as exports should regain momentum once the current uncertainty dissipates and the external environment improves.
||SOUNDBITE by Olli Rehn (In English) saying that: In the UK, a gradual return of domestic demand growth is expected in 2013 with acceleration in 2014.