Euro Zone May Be Recession Free

The 16 nation bloc Euro Zone, which shares the common Euro currency, grew by 0.4 percent in the third quarter of 2009, officially ending five quarters of economic contraction.

Eurostat, the European Union’s statistics agency, reported that gross domestic product for the 16 countries using the single currency, expanded more aggressively than the EU economy as a whole. The EU, which includes non-Euro countries like Britain and Sweden, grew by 0.2 percent in the third quarter. The EU's rate of growth was lower than the Euro Zone's partly because Britain contracted 0.4 percent in the third quarter.

The Euro Zone has now officially joined Japan and the United States, as being technically recession-free. Despite these Macro- Economic milestones, Europe's sharpest recession since World War II has not completely abated, and continues to plague the Euro Zone, and the European Union overall, with high unemployment, weak household spending, and stagnant incomes. Rising unemployment tends to dampens consumer confidence, and for good reason, as regions within the Euro Zone, such as Spain, are suffering from unemployment rates upward of 19%.

Elsewhere within the Euro Zone bloc itself, the German economy grew by 0.7 percent and France grew by 0.3 percent, to lead the charge out of recession. Most individual Euro Zone countries are now out of recession, including the likes of Italy, whose economy grew 0.6 percent, but some do continue to shrink. Spain's economy for example contracted 0.3 percent in the third quarter.

It remains to be seen if this technical growth will translate into real economic growth. Many are wondering if the current GDP growth will continue to manifest once policymakers remove the artificial stimulus measures that they introduced into their economies in the last year. These artificial measures, taken in the last year to prevent the downward economic spiral from recession to depression, are now beginning to enter the economies of nations around the world, making it increasingly difficult to parse technical economic growth, from real economic growth.

By JP