Section III. Prospects for the European Union

GDP in the Euro Area fell by 0.2 per cent in the final quarter of 2001, the first quarterly decline since 1993. With the notable exception of Spain, output declined or stagnated in all the Euro Area economies that have published GDP figures for the fourth quarter. Germany and Austria experienced a technical recession in the latter half of last year, with two consecutive quarters in which output declined. Outside the Euro Area, Sweden and Denmark both recorded modest growth in the final quarter of the year. In the case of Sweden this stemmed from a weakening of the currency against the euro, while Danish growth was supported by an expansion in government expenditure. The widespread downturn in the Euro Area resulted from further contractions in corporate expenditure. Private sector investment and inventory accumulation made a negative contribution to output growth in 2001 as a whole; in contrast consumers' expenditure remained relatively resilient, especially in France and Spain. Trade contracted markedly towards the end of the year, especially in Germany and France. Export and import volumes in the Euro Area both declined by 0.6 per cent in the final quarter of the year. For the year as a whole, net trade made a strong positive contribution to growth, reflecting exceptionally weak import demand in Germany, France, Italy, the Netherlands, Belgium and Finland.