The German economy narrowly escaped recession in the first quarter of 2013, but the growth was weaker than forecast, as the country's coldest winter in a century adversely affected economic activity. Meanwhile, France slipped into a recession amid flagging investment and exports.
Germany's gross domestic product grew 0.1 percent quarter-on-quarter in the first quarter, after adjustment for price, seasonal and calendar variations. This was weaker than the 0.3 percent growth forecast by economists.
Meanwhile, the statistical office downwardly revised the GDP data for the fourth quarter of 2012 to show a contraction of 0.7 percent compared with the originally estimated 0.6 percent shrinkage.
"One of the reasons for this small growth at the beginning of the year was the extremely cold weather," the statistical office said in a statement. The growth was based almost solely on private consumption, the it said.
Investment declined again and net exports had almost no impact on economic growth in the first quarter. Imports were markedly lower than in the fourth quarter of 2012 and exports also decreased.
On a calender adjusted basis, GDP fell 0.2 percent year-on-year in the first three months of this year. This compares with forecasts of 0.2 percent growth. At the same time, the unadjusted GDP fell 1.4 percent year-on-year.
Meanwhile the French GDP declined 0.2 percent quarter-on-quarter in the first quarter of 2013, preliminary data from statistical office Insee showed. Economists had expected a more modest 0.1 percent drop in GDP. This followed a 0.2 percent contraction in the fourth quarter of 2012, which is revised from the previous estimate of a 0.3 percent fall. This was the third GDP decline in the past four quarters.
Insee said that household consumption expenditure fell 0.1 percent from a quarter ago and investment contracted further by 0.9 percent. Exports declined 0.5 percent, while imports edged up 0.1 percent.
Overall, total domestic expenditure and foreign trade contributed negatively to GDP. Conversely, changes in inventories contributed positively to GDP in the first three months of the year, the Insee said.
In its latest Spring 2013 Forecast released earlier this month, the European Commission slashed its growth outlook for Germany for this year to 0.4 percent from the previously estimated 0.5 percent increase. The forecast for 2014 was also cut to 1.8 percent from 2 percent.
According to the Commission, the French economy is seen contracting 0.1 percent this year, in contrast to the earlier prediction of a 0.1 percent expansion. In 2014, the economy is forecast to grow 1.1 percent, which is weaker than the 1.2 percent growth forecast in February.
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