l'europa vista da new york

THE NEW YORK TIMES
Eurozone’s Economic Growth Falls Short, Even as Greeks Shopped
By JACK EWING
AUG. 14, 2015

FRANKFURT — Eurozone economic growth disappointed on Friday, but don’t blame Greece.

Despite all the political haggling and hand-wringing over Greece’s debt problems, the country’s economic growth in the second quarter was unexpectedly brisk. The country grew more than twice as fast as the eurozone as a whole.

That growth spurt could prove fleeting, since part of it reflected panic buying of appliances, cars and other items as Greeks took their money out of ailing Greek banks and spent it on durable goods. And the beginning of tourist season also gave Greece a lift, as travelers discovered that the country’s currency controls did not impede their use of foreign-bank debit and credit cards to eat in tavernas or loll on the beaches of Mykonos.

The real trouble for the eurozone lurks elsewhere, especially in the big, slow-growth economies of the Continent, like France and Italy.
Germany, too, could begin to waver, even though growth in the most recent quarter was solid. The country, which has the eurozone’s largest economy, is heavily dependent on exports. Its industries could start to feel the effects in the coming months of flagging demand from China, an important customer for German machinery and cars.

The eurozone economy continues to gain ground as it slowly recovers from the regional recession that followed the global financial crisis of 2008 and the eurozone’s own debt-related problems in the years that followed.

As a group, the 19 eurozone countries grew at an annual rate of 1.3 percent from April through June, down from 1.5 percent the previous quarter. Greece grew 3.1 percent, from only 0.1 percent at the beginning of the year.

But Friday’s data showed that the recovery remained hesitant and that it was far too weak to quickly bring down the eurozone’s unemployment rate of more than 11 percent.

By both measures — growth and joblessness — the eurozone continues to lag the recovery in the United States, where the latest data showed a growth rate of 2.3 percent and unemployment of 5.3 percent.

Greece, which accounts for a puny percentage of the eurozone’s G.D.P., had little impact on the most recent growth figures. That point might be easy to overlook, considering all the political and financial capital that eurozone leaders have expended to keep Athens afloat.

But foreign banks and other nongovernment investors have little remaining risk in Greece, having taken most of their money out of the country and gotten rid of the Greek bonds that they owned.

Any broader financial market turmoil has been held at bay by the stimulus efforts of the European Central Bank, the central bank concluded in a summary of its monetary policy meeting last month, published on Thursday.

“Some spillover effects from the events in Greece had been observed in the euro area bond and equity markets,” the summary said, paraphrasing a presentation on the economic situation by Benoît Cœuré, a member of the central bank’s executive board. “But, over all, contagion to other euro area countries had been limited.”

For European companies like Miele, a German maker of refrigerators, stoves, washing machines and other appliances, Greece has essentially been a nonevent.

“The global economy showed itself to be more robust than expected, in view of political and economic crisis spots like Russia and the Ukraine, the Middle East and Greece,” the company said in a statement on Thursday, as it reported that sales rose 8 percent to 3.5 billion euros, or about $3.9 billion, in the fiscal year that ended June 30.

For Miele and many other exporters in the eurozone, any shock waves from Greece and from other trouble spots have been outweighed by positive factors, especially low energy prices and a fall in the value of the euro against the dollar and against other major currencies. A cheaper euro makes products from the eurozone less expensive for customers abroad. It also increases the value of sales in foreign currencies when they are converted into euros.

“The big question is when the Chinese slowdown will start to hit the German economy,” Jörg Krämer, chief economist at Commerzbank in Frankfurt, said in a note to clients on Friday.

Growth in the French economy was flat compared with the previous quarter. French consumer spending was weaker than expected, economists said, despite a fall in the price of energy. Typically, consumers spend what they have saved from gasoline and other energy costs on other goods, but that stimulus seems to have faded in France.

The lack of any quarterly growth in France suggested that the biggest problem for the eurozone economy was no longer the smaller countries like Greece, Ireland or Portugal, which preoccupied policy makers in recent years. Rather, it is the large, core countries that account for most of the eurozone economy but are unable to muster sustained growth.

Growth in Italy during the quarter was also disappointing. And while Spain continued to emerge from economic crisis, unemployment there remained above 22 percent, second in Europe only to Greece’s rate of about 25 percent.

Economists fault Italy and France for being too slow to chisel away at the regulations that protect entrenched, politically powerful groups from competition and that impede entrepreneurship.

“Today’s G.D.P. data show that the eurozone recovery must not be taken for granted,” Tom Rogers, an economist who advises the consulting firm Ernst & Young, said in an email. That is particularly true, he added, “in countries where little has been done to improve competitiveness and the climate for job creation.”

Much of Europe’s dynamism is coming from countries in the east. Latvia, a member of the eurozone, had the strongest growth in the European Union, while Poland and the Czech Republic, which are not in the eurozone, also performed well. In the 28 countries of the European Union, first-quarter growth was 1.7 percent on an annual basis.

Only one European Union country, Finland, registered a fall in economic output in the quarter. Finland, a member of the eurozone, continues to suffer from problems at Nokia, once the country’s flagship company, which lost its dominance of the mobile handset market to Apple several years ago. Last year, Nokia sold its handset business to Microsoft, which has dismissed thousands of workers.

Finland’s economic problems help explain why there is strong popular opposition in that country to more aid for Greece.

Greece is expected to fall back into recession this year, as currency controls undercut consumer spending. But there are genuine bright spots in the Greek economy. Tourists have continued to flock to Greece’s beaches despite the political turmoil.

The TUI Group, Germany’s largest provider of package tours, said on Thursday that bookings to Greece were up from last year, although it did not give precise figures.

Greece’s reduced ability to instill concern in investors is probably good for Europe and for the world, but not necessarily for the Greeks. If leaders of the other 18 countries in the eurozone no longer fear contagion from Greece, they have even less incentive to risk their taxpayers’ money to prop up that country’s economy.