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Euro zone Q2 GDP dips on inventory, investment fall

Published 09/02/2009, 05:07 AM
Updated 09/02/2009, 05:09 AM

BRUSSELS, Sept 2 (Reuters) - The euro zone economy contracted only marginally in the second quarter against the previous three months, data confirmed on Wednesday, dragged down by a plunge in inventories and private investment.

The European Union statistics office Eurostat confirmed its earlier estimate that the gross domestic product of the 16 countries using the euro fell 0.1 percent quarter-on-quarter after a 2.5 percent drop in the first three months of 2009.

"The worst is over for the time being," the chairman of euro zone finance ministers, Jean-Claude Juncker, told reporters before they met in Brussels with the European Central Bank.

Second-quarter GDP in the euro area was 4.7 percent lower than a year earlier, after a 4.9 percent fall in the first quarter.

A plunge in inventories was the single biggest negative factor in the second quarter, subtracting 0.7 percentage point from the overall quarterly result. A fall in private investment took away another 0.3 percentage point.

Household consumption and government spending added 0.1 percentage point each to the final outcome and trade contributed 0.7 percentage point as imports plunged much more than exports.

Economists believe the relatively small second-quarter fall means the euro zone could emerge from recession in the third quarter, especially as its two biggest economies, Germany and France, returned to growth in the April-June period.

The depleted inventories will have to be rebuilt, boosting production, while some economic revival globally is likely to boost demand for euro zone exports.

Separately, Eurostat said prices at factory gates in the euro zone fell 0.8 percent month-on-month in July for an 8.5 percent year-on-year drop.

Economists polled by Reuters had expected a 0.6 percent monthly fall and an 8.4 percent annual decline.

The fall in producer prices, triggered mainly by less expensive oil, shows how weak inflationary pressures are in the euro zone. (Reporting by Jan Strupczewski, editing by Dale Hudson)

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