Germany and France enjoyed a surprising return to economic growth in the second quarter of the year, data showed today, ending their recessions earlier than many policymakers and economists had expected.
German gross domestic product rose unexpectedly by 0.3 per cent in the second quarter, bringing an end to the country's deepest recession since World War Two and boosting hopes of recovery in the broader euro zone.
French Economy Minister Christine Lagarde pre-empted data due at 7.45am, announcing gross domestic product in her country also grew by 0.3 per cent in the second quarter.
“The data is very surprising. After four negative quarters France is finally coming out of the red,” Ms Lagarde told RTL radio.
The consensus forecast in a Reuters poll of economists had predicted a 0.3 per cent quarterly contraction in both Germany and France in the second quarter.
Germany suffered a calamitous 3.8 per cent contraction in the first quarter of this year to cap four quarters of decline - although today's data revised that drop to 3.5 per cent - while the French economy shrank by 1.2 per cent.
Euro zone GDP data are due at 9pm with the risks to forecasts of a 0.5 per cent quarterly contraction now clearly to the upside.
The euro climbed and euro zone government bond futures opened down after the economy figures fuelled optimism about the outlook for the single currency bloc's economy.
European shares were poised to open higher on the data and after the US Federal Reserve said late yesterday the world's biggest economy was showing signs of stabilisation.
Evidence is mounting that the worst of the damage wrought by a global financial crisis, which began with a US housing market meltdown in 2007 and took a turn for the worse last year when US bank Lehman Brothers collapsed, is now over.
“The recession has ended. Not just in Germany. The post-Lehman global confidence shock has receded. Firms are investing again,” said Joerg Kraemer at Commerzbank.
Reuters