recession recovery hit a roadblock on Friday as Germany economic growth unexpectedly halted and Italy went into reverse in the final quarter of 2009, though France made up for some of the damage. The news comes at a hard time for Europe's single currency bloc as governments struggle to sort out Greece's debt difficulties and contain financial market fears that have driven the euro lower and government bond yields higher. German gross domestic product was flat in the final quarter of last year, the statistics office said, following expansions in the two previous quarters that ended a year-long recession. Growth of 0.2 percent had been forecast. Italian fared even worse with a GDP fall of 0.2 percent from the third quarter, contrary to forecasts that the third largest economy in the euro zone would keep its head above water with a 0.1 percent GDP increase. France, the euro zone's second largest economy, fared better in the same period with a GDP increase of 0.6 percent versus the third quarter that, unlike Germany, was driven in large part by healthy consumer spending. That amounted to a substantial lift from a GDP rise of 0.2 percent in the third-quarter and was marginally higher than the 0.5 percent fourth-quarter rise economists had predicted. Those figures followed confirmation on Thursday that Spain, one of the hardest hit by the end of housing booms across the globe, stayed in recession with a fourth quarter GDP dip of 0.1 percent versus the previous three months. “The euro zone growth engine has taken a break in the fourth quarter but it should return soon,” ING bank economist Carsten Brzeski said. “Today's numbers, however, were a good reminder that recoveries can not only be bumpy but also capricious.” Part of Europe's problem is that it needs a reasonable pace of economic growth to help limit the surge in sovereign debt caused by the recession of 2008-2009. Forecasters for now believe that the euro zone will have a weaker recovery than the United States this year, just as it fell harder than the United States in 2009. Estimates for euro zone GDP as a whole were due at 1000 GMT and a Reuters poll showed forecasters on average were expecting GDP growth of 0.3 percent quarter-on-quarter, a notch short of the 0.4 percent GDP increase that pulled the currency area as a whole out of recession in the July-September quarter. GDP reports were due later as well for Portugal and Greece. Portugal, another small economy on the euro zone's fringe, is trying to rein its bloated debt and avoid the pain inflicted on Greece, the first country to require pledges of support from other euro zone governments in the 11 years of monetary union. Concern over how Athens will service its debt has hammered the euro, which is trading near a 8 1/2-month low versus the dollar and has fallen nearly 10 percent since late 2009. By 0905 GMT, the euro had fallen half a percent on the day to a day's low of $1.3609, closing in on $1.3585, its weakest since May 2009, which it hit earlier this month. In France, where the recession knocked 2.2 percent off GDP in 2009 as a whole compared to a 5 percent dent in Germany, the end of year news was marginally more positive than expected, once again as a result of domestic demand. While Germany's statistics office does not give the details behind its GDP estimate for another few days, the French data showed a 0.9 percent quarter-on-quarter increase in household consumption in the fourth quarter. That helped to offset the damage from tumbling investment, a major casualty of recession, which fell 1.2 percent in the final quarter versus the preceding one and dropped 6.9 percent over 2009 as a whole. More data on “This is good news, which contrasts with the very disappointing figures out of Germany,” said Jean-Louis Mourier, economist at Aurel BGC. Germany's statistics office said falling investment and consumption offset firmer foreign trade in the fourth quarter. European Central Bank President Jean-Claude Trichet has been warning for some time that the recovery in Europe will be “bumpy” and at times “chaotic”. Severe winter weather at the turn of the year may well blur the picture further. Economists say that could hit GDP in the first quarter but that much of such immediate losses are usually made up in the ensuing months. German Economy Minister Rainer Bruederle has already said growth in the first quarter of 2010 could be near zero.
