Tuesday, May 15, 2012
French and German GDP - a welcome puzzle
Posted by David Smith at 08:45 AM
Category: Thoughts and responses

There is some small eurozone relief in the fact that German gross domestic product rose by 0.5% in the first quarter, while French GDP was flat. Both countries have avoided the commonly-used definition of recession: two consecutive quarters of declining GDP.

This is in contrast, of course, to Britain, where GDP fell by 0.3% in the final quarter of 2011 and again by 0.2% in the first quarter, a number that may be revised down to minus 0.3%. The puzzle is that the purchasing managers' surveys for the UK were stronger than for both France and Germany in the first quarter. Germany's PMIs suggested modest growth, France's something weaker. UK GDP in the quarter, it seems, should have been at least as good as these two economies. Unless, of course, the purchasing managers' surveys are wrong ...