Germany, France post solid growth with bleaker outlook

Germany and France posted solid growth in the third quarter even as euro zone countries at the sharp end of the debt crisis are faring much worse while analysts expect bleaker times to come across the currency bloc.The German economy grew 0.5 percent in July-September, in line with market forecasts, and second quarter growth was revised up to 0.3 per cent from 0.1 per cent.France expanded by 0.4 per cent on the quarter, having contracted by 0.1 per cent in the previous three months.The euro area's debt crisis is likely to make matters worse in the months to come with countries such as Italy, Greece, Ireland, Portugal and Spain forced to adopt tough austerity measures in order to stop the bond market driving them towards default.Economists say there is no visible growth strategy in place to counter those cuts.'Looking ahead, sentiment indicators point to a significant growth slowdown, a contraction of the economy towards the end of the year is possible,' Carsten Brzeski, economist at ING, said of the German economy, which has easily outstripped all others in the euro zone.GDP data for the whole currency bloc, due for release at 1000 GMT, are forecast to show growth of just 0.2 per cent.Newly-installed European Central Bank President Mario Draghi has predicted the bloc would be suffering a 'mild recession' by the end of the year.France has also rushed through belt-tightening measures, announcing 65 billion euros of tax hikes and budget cuts over five years earlier this month, as President Nicolas Sarkozy seeks to protect the country's top-notch credit rating without killing his chances of re-election in six months time.'Positive growth means tax revenue, but there isn't enough growth so we have to manage our budget like you do at home, or like a company chief,' labour minister Xavier Bertrand said after the GDP data were released. 'If there's not enough money coming in then there must be less money coming out.
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