Europe Avoids Q1 Recession Thanks To Strong Exports And Weak Euro

Tyler Durden's picture


When in doubt: crush your "common" currency by keeping your "partners" on the verge of bankruptcy, and export, export, export. After contracting by 0.3% in Q4 for both the Euroarea (of 17 countries) and the EU27, just released data from Eurostat indicated that in Q1, GDP for both "areas", but notably the Eurozone, was flat quarter over quarter courtesy of... strong exports. Which in turns shows just why various countries in the Eurozone (coughgermanycough), namely those who actually are relevant in the GDP calculation, seek to benefit greatly from the perception that Europe is on the brink, and the EUR is sliding as a result, further promoting exports, and thus, growth. As a result, because technically it avoided two consecutive quarters of contraction, the Eurozone has avoided the dreaded recession. For now. Expect further speculation that Europe is imploding, continuing to benefit solely the one export powerhouse of Europe: Germany.

From Reuters:

Strong exports saved the euro zone from a recession in the first quarter, offsetting a plunge in investment and inventories, data showed on Wednesday, as the EU statistics office confirmed gross domestic product was flat in January-March quarter-on-quarter.


The European Union's Statistics Office did, however, revise down its previous estimate of the year-on-year GDP growth in the first quarter, to a contraction of 0.1 percent from a flat reading.


The data comes as the European Central Bank meets to discuss interest rates. Economists expect no policy moves on Wednesday, but possibly an indication of readiness to cut rates as early as next month, given a weakening economy and Spain's banking troubles.


The output of the 17 economies that make up the euro zone contracted 0.3 percent in the last quarter of 2011 against the previous three months and, if the economy were to have shrunk for a second consecutive quarter, the euro zone would be in recession.


Eurostat said exports contributed 0.5 percentage points to the final quarterly GDP figure, offsetting falls in investment and inventories, which took away 0.3 percentage points and 0.2 percentage points respectively.


Eurostat data showed Spain, the Netherlands, Portugal, Greece, Italy, Cyprus were in recession after two, or more, consecutive quarters of shrinking growth.

Of course, had Eurostat calculated some of the biggest contractors in the quarter, namely Ireland and Greece, instead of leaving them out of the calculation, the final result would have not been quite as palatable.

Here is what EU-27 GDP in Q1 looked like:

That said, even with ongoing EUR weakness, it is hardly likely that Q2 European GDP will be "flat" following disastrous European PMIs for the past 3 months, just released Spanish Industrial output for April which collapsed by 8.3% on expectations of a -6.5% print, the most since October 2009, as well as German Industrial production crashing 2.2% in April, on expectations of a -1% print.

Slowly the real recession, cooked statistics aside, is becoming a very real depression.

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Wed, 06/06/2012 - 06:54 | 2498667 fonzannoon
fonzannoon's picture

is this a one day face ripper, fading into the close? Or is this 1450 S&P?

Wed, 06/06/2012 - 07:06 | 2498687 MillionDollarBonus_
MillionDollarBonus_'s picture

This is akin to our symbiotic relationship with China, which the doomer libertarians fail to understand. China buys our debt, which keeps our dollar strong and inflation low despite our easy monetary policy, and in return we buy relatively cheap Chinese exports to support their economy. This is the advantage of having a consumer economy, rather than an export economy.

Wed, 06/06/2012 - 07:10 | 2498693 francis_sawyer
francis_sawyer's picture

So I guess instead of taking the job at Goldman Sachs or Credit Suisse, you opted to keep your tenure at Harvard...

Wed, 06/06/2012 - 07:29 | 2498707 Ghordius
Ghordius's picture

Niall Ferguson explains the symbiotic relationship in a nicer way: China is the hard-working husband, America is the beautiful wife that propels and sustains the world economy by spending, spending and spending.

For this elegant allegory he was invited to the Bilderberg Meeting that ended on June 3rd, 2012, toghether with our esteemed "GDP is everything" FT commentator Martin Wolf.

Who said our age would not appreciate poetry?

Twenty years of leaning on europe's shoulders, ten of leaning on China's shoulders, now we'll see what is the next solution...

Wed, 06/06/2012 - 07:32 | 2498722 Rubicon
Rubicon's picture

"America is the beautiful wife"


In a Joan Rivers sort of way.

Wed, 06/06/2012 - 07:47 | 2498750 Ghordius
Ghordius's picture

I'd say more in a Angelina Jolie or Demi Moore sort of way.

Wed, 06/06/2012 - 07:56 | 2498767 Rubicon
Rubicon's picture

Not from any perspective outside of the US of A!

Wed, 06/06/2012 - 10:41 | 2499234 Overfed
Overfed's picture

Demi is still pretty hot. Angelina is a moonbat.

Wed, 06/06/2012 - 09:15 | 2498931 financial apoca...
financial apocalyptic contagion's picture

holy shit that bitch is 78

yeah much more accurate description that angelina or demi

Wed, 06/06/2012 - 15:34 | 2500614 PrinceDraxx
PrinceDraxx's picture

Well, the looks start to go after awhile, then all you end up with is some botoxed bitch like Nancy Pelosi.


Thanks anyway, if I want to puke I'll just drink some flouride.

Wed, 06/06/2012 - 07:32 | 2498724 GeneMarchbanks
GeneMarchbanks's picture

That fella is a CFR ponce. The Yanks love Brits coming over and whispering sweet nothings in their ear, gets 'em all wet and self-important. There is one Brit to satisfy every propaganda POV that exists in the political sphere.

Ferguson, Christopher Hitchens, Andrew Sullivan, even Hendry can be in that endless list.


Wed, 06/06/2012 - 07:25 | 2498710 autonomos
autonomos's picture

I can never choose: should I vote up your fake-troll posts?

Wed, 06/06/2012 - 07:28 | 2498716 CPL
CPL's picture

Only if you have countries available to export the inflation to.


70 Years after the fact, who's honestly left?

Wed, 06/06/2012 - 07:39 | 2498732 Peter Pan
Peter Pan's picture

Dear Million Dollar Bonus,

Here is a challenge for you. Do you think you can produce three posts in a  row which will attract more upticks that down ticks?

Or are you just amusing yourself given the anonimity afforded to you?

Wed, 06/06/2012 - 15:26 | 2500577 PrinceDraxx
PrinceDraxx's picture

The only problem with the sybiotic relationship you mentioned is that China has quit buying our worthless paper. Not to mention that nagging little problem of their economy heading into the dumpster.


Wed, 06/06/2012 - 06:55 | 2498669 GeneMarchbanks
GeneMarchbanks's picture

EuropAAA! Don't call it a comeback.

Wed, 06/06/2012 - 06:56 | 2498670 Poor Grogman
Poor Grogman's picture


Wed, 06/06/2012 - 09:25 | 2498954 Ethics Gradient
Ethics Gradient's picture


Hang on. Do I need to subtract 2.4% for inflation?

You know what, I'm begining to think these numbers are a little bit disingenuous.

Wed, 06/06/2012 - 06:56 | 2498671 Popo
Popo's picture

So no need for QE3 then?

Wed, 06/06/2012 - 08:22 | 2498805 Sudden Debt
Sudden Debt's picture

No no, we need the QE! because the exports where actually the capital flights outa here!

Wed, 06/06/2012 - 06:57 | 2498672 cossack55
cossack55's picture

Are the bottom 4 the GLIM or the MILG?

Wed, 06/06/2012 - 06:58 | 2498674 LongSoupLine
LongSoupLine's picture

Great...that means the ECB doesn't have to cut rates and the world is fine. In fact, everything MUST be fixed 'cause the futures have SPX back over 1300.

Ahhh yes, "price discovery"....un-f'ing-real.

Wed, 06/06/2012 - 06:58 | 2498675 Debtless
Debtless's picture

So tell Liesman there's no need to bail Europe out then with money we don't have anyway.

Wed, 06/06/2012 - 06:59 | 2498676 HomeBrewPrepper
HomeBrewPrepper's picture

Qe to infinity and beyond, these markets are so manipulated, just do the opposite of cnbc squakbox. It works well for me. I called the top and recent bottom perfectly. Just get back over 13000 Dow then I'll get back out til Romney is in office. Nobummer

Wed, 06/06/2012 - 07:04 | 2498680 LawsofPhysics
LawsofPhysics's picture

Still believe the two party lie huh? Good little sheep.

Wed, 06/06/2012 - 09:09 | 2498921 HomeBrewPrepper
HomeBrewPrepper's picture

No, I just believe we will see a rally to trade if Romney wins. Once I studied the fed I realized whoever controls the money has the power. Dems and rep are the same? Markets are manipulated.

Wed, 06/06/2012 - 07:01 | 2498679 LawsofPhysics
LawsofPhysics's picture

If crushing the common currency is the plan, how would that work with a single world currency? Certainly not something china would like. They are constantly crushing the yuan.

Wed, 06/06/2012 - 07:12 | 2498694 francis_sawyer
francis_sawyer's picture

China will peg the yuan to the single world currency... BWAHAHAAHAHAHA!

Wed, 06/06/2012 - 07:35 | 2498728 ArkansasAngie
ArkansasAngie's picture

Reagan's rolling recessions.

I've noticed this pattern before.  Keep the dollar strong till it hurts and then trounce it back up to 140'ish.  Hold till green shoots.  Then back to 125'ish.


Wed, 06/06/2012 - 07:06 | 2498684 piliage
piliage's picture

Everything's fixed. Buy Buy Buy!

Wed, 06/06/2012 - 07:06 | 2498686 ziggy59
ziggy59's picture

Was it something geithner said?

Wed, 06/06/2012 - 07:07 | 2498688 francis_sawyer
francis_sawyer's picture

Just think when the Euro drops to zero! Exports will be thru the roof!

Wed, 06/06/2012 - 07:15 | 2498697 LongSoupLine
LongSoupLine's picture

Yep, and ZH'ers will be the only ones buying 'cause payment will be in gold/silver only.

Wed, 06/06/2012 - 07:08 | 2498690 Panafrican Funk...
Panafrican Funktron Robot's picture

Thought:  Instead of calling it "Euroarea", can we shorten it to "Eurea"?  Seems more fitting.

Wed, 06/06/2012 - 07:13 | 2498691 muppet investor
muppet investor's picture

A simple explanation for the situation in Europe:

Wed, 06/06/2012 - 07:12 | 2498695 q99x2
q99x2's picture

Government statistics = Fraud

Economic Psychological Warfare

Gold's up.

Wed, 06/06/2012 - 07:42 | 2498738 ThirdWorldDude
ThirdWorldDude's picture

It's not a fraud, they've just forgotten to take the pink sunglasses off.  /s


The eurotard douchebags are so desperate to present "growth", it's just plain pathetic. Even with Greece & Ireland out of the equation, if you adjust the Q1 numbers for the inflation, EU still ends up under water. 

Wed, 06/06/2012 - 15:20 | 2500553 PrinceDraxx
PrinceDraxx's picture
1. A deception deliberately practiced in order to secure unfair or unlawful gain. 2. A piece of trickery; a trick. 3.
a. One that defrauds; a cheat. b. One who assumes a false pose; an impostor. I believe numbers 1 & 2 are what we are dealing with here. You can use number 3 to describe the "public servants" who are practicing and furthering the deception. Since it is unlawful, perhaps they should go to jail for a while. Actually, public stocks so the citizens can show them what they think of them.
Wed, 06/06/2012 - 07:17 | 2498699 oogs66
oogs66's picture

but don't we want a weak currency?  how can every single country in the world have the same plan - weak currency and export way to profitability?

Wed, 06/06/2012 - 07:47 | 2498751 LULZBank
LULZBank's picture

You think, that is the only thing that does not make sense?

Please play along with the programme and dont ask intelligent questions.

Wed, 06/06/2012 - 11:51 | 2499569 Marco
Marco's picture

Because there are no alternatives (except for the countries with low populations and an abundance of natural resources). We are all in a race to the bottom competition ... inflation happens to be the most efficient way to race to the bottom.

The export part is mostly a side effect, the real intent is to reduce median income.

Wed, 06/06/2012 - 07:20 | 2498703 BandGap
BandGap's picture

I have an odd feeling this is the day. The Wisconsin election, the EU avoiding the dip.......something gives today.

Wed, 06/06/2012 - 07:27 | 2498715 crawl
crawl's picture

The cards have been played last night with the bank downgrades, Australia doing better than predicted, and hopes rising the debt problems self extinguish themselves.

Add in rumor of the Fed is going to do something.

Crazy market.

Wed, 06/06/2012 - 07:31 | 2498719 Rubicon
Rubicon's picture

Q2 will reveal all

Wed, 06/06/2012 - 07:32 | 2498723 youngman
youngman's picture

And if the Banks get their trillions in bailouts ..that should be good for the GDP too...everyday is crazy...tomorrow Spain is going to sell bonds...yes Spain....why I ask...they can't pay for what they have now....but they are going to sell more...and what is funny is someone will buy them....I don´t care if there 15%....they will defaulted on or some other term will be will never get back what you are "buying" them for...but whoever it is buying them...will want a bailout too...

Wed, 06/06/2012 - 07:35 | 2498729 Peter Pan
Peter Pan's picture

All these figures mean very little as we all know how they massage the inflation figures so as to maximise GDP. The imbalances however are there and need to be addressed.

Any talk of a rescue plan is dangerous however unless it also has a pre-determined step by step plan for unwinding the Euro in the event that they find that fiscal unions don't work as well as expected.


Wed, 06/06/2012 - 07:38 | 2498730 ArkansasAngie
ArkansasAngie's picture

We don't need to create no stinkin bad banks ... they already exist.

Wed, 06/06/2012 - 07:40 | 2498736 chump666
chump666's picture

pitiful thy leaders.  the asian short sqeeze (finally) ensures the rallies, the fudge stats were optional.  last gasp trade is in.

Wed, 06/06/2012 - 09:15 | 2498930 MGA_1
MGA_1's picture

25% unemployment and not in recession ?

Wed, 06/06/2012 - 10:19 | 2499137 Alethiometer
Alethiometer's picture

It's even worse for the younger demographic over there.

Young people don't need jobs in a welfare state right?

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