13.8.09

Europe's Heart Beats

Germany and France have seen an unexpected jump in second quarter GDP. Both economies expanded 0.3 per cent from the first quarter.

Global demand for European exports, government subsidies and low interest rates all had a positive effect.

However the press' parroting of French Finance Minister Christine Lagarde, that France and Germany are out of recession just because the first quarter was much worse than the second, is ridiculous. The GDP of both countries fell sharply compared with the same quarter a year before.

Taking this approach, Russia would be out of recession because GDP rose 7.5% from the first quarter, while it fell 10.9% compared with the second quarter last year.

German and French economies also both shrank on an annual basis.

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