Germany and France, Europe’s two biggest economies, posted better than expected growth in the fourth quarter of last year, reinforcing hopes of a steady post-crisis recovery in the eurozone.
The Federal Statistics Office in Germany said exports helped drive growth in the final quarter to 0.4 per cent, up a notch from 0.3 per cent in the previous quarter and ahead of its preliminary estimate published last month of 0.25 per cent.
France, meanwhile, returned to growth in the fourth quarter, boosted by a bounce in domestic consumption, investment and exports.
Figures from Insee, the French national statistics institute, showed the economy expanded by 0.3 per cent in the past three months. It also said growth was flat in the third quarter, a slight upward revision from its previous estimate of a contraction of 0.1 per cent.
Pierre Moscovici, France’s finance minister, said the figures showed France was “back on a growth path” and should reach growth this year of 1 per cent.
But he added: “We must do more. If we want to create more jobs, we need growth stronger than 1 per cent.”
Full year growth in 2013 reached 0.4 per cent in Germany and 0.3 per cent in France – the latter ahead of the socialist government’s estimate of 0.1 per cent.
The Federal Statistics Office said the main contributor to fourth quarter growth in Germany was exports, which increased substantially more than imports. In the third quarter domestic consumption had been the main driver.
“Government final consumption expenditure remained at the level of the previous quarter, while household final consumption expenditure was slightly lower,” it said.
It added that capital investment was markedly higher, but inventories had been reduced, slowing economic growth.
The fourth quarter outcome in France was slightly below a fourth quarter forecast by the Bank of France of 0.5 per cent but ahead of market expectations of 0.2 per cent growth, reports The Financial Times.
France has been under the spotlight in recent months as the pace of its post-crisis recovery lagged behind Germany and the UK – and Spain and Italy.
But Insee said domestic consumption accelerated in the fourth quarter, rising 0.5 per cent, while investment rose for the first time after seven months of decline, up 0.6 per cent after shrinking by 0.3 per cent in the third quarter. Exports also bounced back, growing by 1.2 per cent after a 1.6 per cent decline in the previous three-month period.
“Domestic demand [excluding inventory changes] accelerated significantly and contributed 0.5 points to gross domestic product after a neutral contribution in the third quarter,” Insee said.
The outcome will come as a relief to President François Hollande’s government. But some concern remains that this year has got off to a weak start. Recent market indicators have signalled that industrial and service sector production remain weak.
Concern about the sluggish recovery prompted Mr Hollande to launch a new pro-business policy initiative last month, promising cuts in labour costs, public spending and taxes in a bid to stimulate growth and reverse still-rising unemployment.
Read more of this report from The Financial Times.
See also: A French austerity programme that threatens all of Europe's economies