Eurozone: Q2 contraction confirmed in second quarter
September 6, 2012
In the second quarter, Eurozone GDP contracted 0.2% over the previous period, confirming the result of the flash estimate released by the statistical office (Eurostat) on 14 August. The reading was below the flat reading recorded in the first quarter. On an annual basis, the economy contracted 0.5%, which was down from the 0.1% drop recorded in the previous quarter and marked the worst reading since the final quarter of 2009. The result was driven by a deterioration in the net contribution from the external sector. Exports of goods and services rose 1.3% over the previous quarter, which was above the 0.7% rise observed in Q1, while imports rose 0.9%, contrasting a 0.2% fall in the previous three-month period. As a result, the contribution from net exports to overall growth fell from 0.4 percentage points in Q1 to 0.2 percentage points in Q2. Meanwhile, private consumption contracted 0.2% over previous quarter, mirroring the result recorded in Q1, while fixed investment improved from a 1.3% drop in Q1 to a 0.8% fall. Despite the improvement in fixed investment, a negative shift in inventories caused domestic demand to contract at the same 0.4% pace seen in the previous quarter.
Author: Armando Ciccarelli, Head of Data Solutions