A major European Q1 datafest arrived on Friday. Blasting through all the figures released so far this morning, however, the following news jumps out.
From Bloomberg:
May 15 (Bloomberg) — The German economy contracted more than forecast in the first quarter, slumping the most in at least four decades after the global financial crisis crippled exports and investment.
Gross domestic product plunged a seasonally adjusted 3.8 percent from the fourth quarter, when it fell 2.2 percent, the Federal Statistics Office in Wiesbaden said today. That’s the steepest drop since quarterly data were first compiled in 1970 and compares with the 3 percent decline predicted by economists in a Bloomberg News survey. It also marks an unprecedented fourth successive quarterly contraction.
We reiterate: that’s the steepest drop in quarterly German GDP data since records were first compiled in 1970, something that’s hardly supportive of Jean Claude Trichet’s theory that the global economic crisis has reached an inflection point.
What it does do instead, however, is confirm this as the worst post-war recession yet.
What’s more, as Barclays Capital’s Julian Callow points out in his morning note, this now puts serious downside risk to the euro-area real GDP figure:
…we now look for euro area real GDP in Q1 to have fallen -2.3% q/q (with risks of -2.4%) q/q, cf. our sub-consensus estimate last Friday (which was -2.1% q/q with downside risks, cf. consensus: -2.0%). While Eurostat will not revise the previous history, revisions at a country level imply that euro area Q4 08 real GDP will have declined from -1.60% q/q to -1.73%. In turn, euro area real GDP this year now looks likely to decline around 4.0% y/y (cf. our previous estimate of -3.6%).
Meanwhile, in other European Q1 GDP announcements the news was hardly more optimistic:
Dutch Q1 GDP fell 2.8 per cent on the quarter – worse than expected
French provisional Q1 gdp fell 1.2 per cent – in line
Austria’s economy shrank by 2.8 per cent
Hungary’s Q1 GDP falls an annual 6.4 per cent – worse than expected
Czech Q1 GDP drops by a record 3.4 per cent year-on-year – worse than expected
Finnish March GDP falls 10.8 per cent year on year – in line
Romanian economy shrinks 2.6 per cent – better than expected
Italian Q1 GDP posts steepest fall since 1980 after contracting 2.4 per cent – worse than expected
The euro area Q1 flash is due at 10am BST.
Related link:
German economy shrinks 3.8% – FT