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France and Germany heading for recovery

France and Germany both reported GDP growth of 0.3% over the second quarter of 2009 this morning, indicating that their economies are moving out of recession.

At the same time, total eurozone GDP fell by just 0.1% in the second quarter of 2009, compared with a decline of 2.5% in the previous quarter, according to Eurozone GDP data released by Eurostat today.

The German Federal Statistics office reported an increase in both household and government spending.

German GDP growth was further boosted by figures showing that imports declined more sharply than exports. German unemployment increased by just 0.1% year-on-year.

In France, Insee, a statistics bureau, reported that GDP growth was due in part to a narrowing of the French trade balance, as imports fell by 2.3% whilst exports grew by 1%.

French household spending increased by 0.4%, from 0.1% in the first quarter. Production grew by 0.5% compared with a 1.9% decline between January and March 2009.

Eurostat also reported GDP growth from Greece, at 0.3%, Portugal, also 0.3% and Slovakia, at 2.2%.

British GDP fell by 0.8%, an improvement on the 2.4% decline reported in the first quarter of the year.

The signs of recovery from France and Germany follow strong economic news from Japan. Earlier this week, Japan reported an increase in manufacturing output, increases in current account and trade surplus, and a seventh consecutive monthly rise in service sector confidence.

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