ANALYSIS:PROOF, IF proof were needed, that the economic activity in Europe has slowed came yesterday. Both the 27-member EU and its 17-member euro-area subgroup registered sluggish gross domestic product growth in the second quarter of 2011.

With GDP just 0.2 per cent higher than in the first quarter, the quarterly growth rate was the slowest since the euro zone emerged from recession two years ago. But a bigger concern is that yesterday’s numbers add to the evidence that the European economy is beginning to slide back into recession. Is the dreaded double-dip upon us?

The evidence at the half-way point in the third quarter is that the European economy has not double-dipped, even as many forward-looking indicators head south. That is the “good” news.

The bad news is that the balance of risks to growth is heavily to the downside. The risks include negative real economy effects from the ongoing debt crisis, the danger of that crisis deepening and slowdowns in large export markets such as the US and Asia.

If there were any positives in yesterday’s preliminary GDP numbers, it was that the north-south growth divide narrowed in the second quarter.

Italy, the euro-area’s third-largest economy, expanded by 0.3 per cent. This was up from 0.1 per cent in the previous two quarters and only the second time in 3½ years that Italy exceeded the aggregate growth rate for the single currency zone.

Spain, the fourth-largest economy, managed a 0.2 per cent expansion, broadly in line with its performance since emerging from recession at the beginning of 2010. Given the domestic headwinds it faces, in the form of 21 per cent unemployment and a burst housing bubble, Spain’s performance was as good as could possibly have been expected.

Even Portugal, which is undergoing harsh austerity, managed to emerge from its recession. After two consecutive quarters of contraction, the economy stabilised in the April-June period. Neither Ireland nor Greece has published figures yet.

By contrast, the euro zone’s two largest economies, Germany and France, underperformed in the second quarter, with the former expanding by just 0.1 per cent and the latter registering no growth.

Separate monthly trade figures for June were also published yesterday by Eurostat, the EU’s statistics agency. Euro area goods exports fell sharply in June. While care is needed in interpreting a single month’s data, the month-on-month decline of 5 per cent in the value of the bloc’s exports does not augur well.