Italy and French Economies Diverge

Economic data from the eurozone has pointed to a pick-up in France, while Italy’s decline has deepened.

Italy’s economy shrank for a seventh successive quarter between January and March, according to official figures.

Other data indicated that the country’s industrial output fell 0.3% in April, suggesting the decline was continuing.

In contrast, French industrial production surged 2.2% in April, surprising economists who on average had expected just a 0.3% rise.

The surge was driven by a rise in activity in the metalworking, car-making and textile industries.

The data came as the Organisation for Economic Cooperation and Development (OECD) said the rate of growth in the US and Japan was outstripping growth in the Eurozone.

However, the Paris-based club of industrialised countries, said that its monthly indicator for April, which measures the expected growth rates of all 33 OECD members, said the eurozone overall appearing to be picking up some momentum.

In contrast to the newly-released official statistics, the OECD said there was “positive change” in Italy, but “no change in momentum” in French growth.

Italy, the eurozone’s third largest economy, has been in recession since the middle of 2011, with a sharp fall in exports in the first quarter exacerbating its decline.

The country’s economy suffered a 2.4% contraction last year, and economists are predicting it could shrink by a further 1.5% this year, based on a poll taken by the news agency Reuters.

Meanwhile, France – whose economy fell into recession in the first quarter of this year, with GDP contracting by 0.2% for the second three-month period in a row – hopes to see a return to positive growth in the second quarter of this year.

The Bank of France forecasts that the second-largest economy in the eurozone, will grow 0.1% in the April-to-June period.

BBC World News

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell