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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fonzannoon's picture

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

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.

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...

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...

Rubicon's picture

"America is the beautiful wife"


In a Joan Rivers sort of way.

Ghordius's picture

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

Rubicon's picture

Not from any perspective outside of the US of A!

Overfed's picture

Demi is still pretty hot. Angelina is a moonbat.

financial apocalyptic contagion's picture

holy shit that bitch is 78

yeah much more accurate description that angelina or demi

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.

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.


autonomos's picture

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

CPL's picture

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


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

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?

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.


GeneMarchbanks's picture

EuropAAA! Don't call it a comeback.

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.

Popo's picture

So no need for QE3 then?

Sudden Debt's picture

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

cossack55's picture

Are the bottom 4 the GLIM or the MILG?

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.

Debtless's picture

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

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

LawsofPhysics's picture

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

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.

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.

francis_sawyer's picture

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

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.


piliage's picture

Everything's fixed. Buy Buy Buy!

ziggy59's picture

Was it something geithner said?

francis_sawyer's picture

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

LongSoupLine's picture

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

Panafrican Funktron Robot's picture

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

q99x2's picture

Government statistics = Fraud

Economic Psychological Warfare

Gold's up.

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. 

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.
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?

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.

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.

BandGap's picture

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

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.

Rubicon's picture

Q2 will reveal all

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...

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.


ArkansasAngie's picture

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

chump666's picture

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

MGA_1's picture

25% unemployment and not in recession ?

Alethiometer's picture

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

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