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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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Rubicon
Rubicon's picture

"America is the beautiful wife"


In a Joan Rivers sort of way.

Wed, 06/06/2012 - 07:47 | Link to Comment Ghordius
Ghordius's picture

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

Wed, 06/06/2012 - 07:56 | Link to Comment Rubicon
Rubicon's picture

Not from any perspective outside of the US of A!

Wed, 06/06/2012 - 10:41 | Link to Comment Overfed
Overfed's picture

Demi is still pretty hot. Angelina is a moonbat.

Wed, 06/06/2012 - 09:15 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment autonomos
autonomos's picture

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

Wed, 06/06/2012 - 07:28 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

EuropAAA! Don't call it a comeback.

Wed, 06/06/2012 - 06:56 | Link to Comment Poor Grogman
Poor Grogman's picture


Wed, 06/06/2012 - 09:25 | Link to Comment 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 | Link to Comment Popo
Popo's picture

So no need for QE3 then?

Wed, 06/06/2012 - 08:22 | Link to Comment 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 | Link to Comment cossack55
cossack55's picture

Are the bottom 4 the GLIM or the MILG?

Wed, 06/06/2012 - 06:58 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment LawsofPhysics
LawsofPhysics's picture

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

Wed, 06/06/2012 - 09:09 | Link to Comment 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 | Link to Comment 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 | Link to Comment francis_sawyer
francis_sawyer's picture

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

Wed, 06/06/2012 - 07:35 | Link to Comment 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 | Link to Comment piliage
piliage's picture

Everything's fixed. Buy Buy Buy!

Wed, 06/06/2012 - 07:06 | Link to Comment ziggy59
ziggy59's picture

Was it something geithner said?

Wed, 06/06/2012 - 07:07 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment muppet investor
muppet investor's picture

A simple explanation for the situation in Europe:

Wed, 06/06/2012 - 07:12 | Link to Comment q99x2
q99x2's picture

Government statistics = Fraud

Economic Psychological Warfare

Gold's up.

Wed, 06/06/2012 - 07:42 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Rubicon
Rubicon's picture

Q2 will reveal all

Wed, 06/06/2012 - 07:32 | Link to Comment 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 | Link to Comment 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 | Link to Comment ArkansasAngie
ArkansasAngie's picture

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

Wed, 06/06/2012 - 07:40 | Link to Comment 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 | Link to Comment MGA_1
MGA_1's picture

25% unemployment and not in recession ?

Wed, 06/06/2012 - 10:19 | Link to Comment 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?

Wed, 06/06/2012 - 11:59 | Link to Comment JeffB
JeffB's picture

Of course, wouldn't Germany's exports be far better if they weren't so adamantly and publicly against the PRINT, PRINT, PRINT economic policy recommended by virtually everyone else, rather than the austerity and fiscal sanity of trying to live within one's means that is causing so much hatred and vitriol being thrown their way?

It would certainly lead to a much weaker euro than their current policies, and theoretically should help their exports far more. That would also help fuel a bit of inflation reducing the pressure on their banks, reduce the number of businesses and homes that are underwater on their loans etc.

It's also raising the risk that one or more of their Eurozone partners will pass the point of no return and announce their exit which will cost them dearly financially and in public sentiment.

The hypothesis that they're deliberately pushing austerity to weaken their partners (& their banks and their own balance sheets) in an effort to weaken the Euro to help exports doesn't seem to hold water from my point of view.


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