Germany and Spain push EZ up

The euro zone’s locomotive Germany, the fourth world’s largest economy, has found in Spain an allied in Southern Europe to fuel the emergent regional recovery. In a context of almost absolute convergence in the EZ’s peripheral countries, Spain’s separates from their counterparts with a GDP increase by 0.4% in the 1Q14 against Italy and Portugal’s return to past times of recession with a -0.1% a -0.7% growth, respectively (compared to estimated 0.2% and 0.1%).

This quarterly Spanish expansion, a real green shoot according to The Corner’s senior analyst Joan Tapia, is to help the fourth largest EZ’ economy, to accompany Germany in the path to recovery. In fact, it has been the other country clearly growing in the 1Q14.  Indeed, France’s GDP figures were dissapointing since they did not even reach the forecast of 0.1% and left stranded in a plain 0%. The Netherlands, another theoretically economy in the orbit of core Germany, also suffered a significant slowdown to -1.4%.

Last European Comission’s imbalances report urged Germany to resolve its chronic current account surplus to continue acting as the Euro zone’s locomotive. Despite initial resistant to change, Angela Merkel recently announced her cabinet would increase German public workers’ salaries by 3% this year, thus promoting internal consumption and external demand from Southern economies.

As far as Spain is concerned, hard times of bugdetary cuts have seemengly resulted in positive figures. Also a sharp fall in Spain’s imports, as well as the statistical effect of falling prices, contributed to a higher real-GDP’ registers. These 1Q14’s European figures are half the expected by analysts’ consensus which stood at 0.4%. However, the ECB will presumably take move soon.

About the Author

Julia Pastor
Julia Pastor has broad experience in business writing for Consejeros Media Group at Consejeros, Consenso del Mercado and The Corner. Previously, she worked for the financial news agency GBA and contributed to El País Business. She holds a Master's in Financial Journalism and a degree in English from the Complutense University in Madrid.

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