The eurozone lurched back into recession during the third quarter of the year, data released Thursday showed, amid warnings that the downward spiral in the crisis-hit currency economy could deepen in the coming months.
The 17-member eurozone's economy shrunk by 0.1 per cent in the
three months to the end of the September, the European Union's
statistics office Eurostat said. Analysts had expected a Q3 fall of
0.2 per cent.
The latest quarter-on-quarter fall in gross domestic product (GDP)
follows a 0.2-per cent drop in the second quarter. Economists define
a recession as two consecutive quarters of negative growth.
But economists warned that the region could slide deeper into
recession in the coming months as governments press on with a tough
round of fiscal austerity aimed at slashing high debt-and-deficit
levels.
"In our forecasts, the fourth quarter is likely to witness a
renewed intensification of the recession," said Marco Valli, chief
eurozone economist with Italy's Unicredit bank.
Valli expects the currency bloc's economy to shrink by 0.4 per
cent quarter on quarter in the final three months of the year.
Year-on-year, GDP fell by 0.6 per cent, Eurostat said . This
followed a year-on-year slump of 0.4 per cent in the second quarter.
The eurozone only emerged from its last recession in 2009 with a
slew of recent data and indicators pointing to a growing sense of
gloom amid the region amid rising unemployment and falling industrial
production.
The new GDP figures came in the wake of a wave of protests across
the currency bloc Wednesday with demonstrators calling on governments
to end the budget cuts and to kick start their economies.
Releasing the data, Eurostat said the broader 27-member EU had
escaped recession, with the region's economy chalking up an anaemic
0.1 per cent third-quarter growth rate after shrinking by 0.2 per
cent in Q2.
The slight pick up in EU growth was helped by 1-per-cent gain in
Britain's growth rate following the economic benefits to the country
resulting from mounting the Olympic Games.
Underlying the fragile state of the eurozone economy, Eurostat
also released figures showing inflationary pressures easing in the
common currency economy - an additional sign of weak economic
activity.
Annual inflation in the region edged down to 2.5 per cent in
October, from 2.6 per cent in September.
Helping to push the eurozone back into recession was another sharp
contraction in the economies at the centre of the eurozone debt
crisis.
On Wednesday, for instance, figures released in Athens showed the
economy of cash-strapped Greece shrinking by 7.2 per cent compared
with the third quarter of 2011, with the nation entering its sixth
year of recession.
Spanish GDP retreated by 0.3 per cent.
But the release of the latest eurozone GDP data also shows the
fallout from the debt crisis gripping the so-called periphery states
in southern Europe reaching the region's strongest economies in the
north.
"The periphery nations are continuing to drag the stronger core
economies in behind them," said Commerzbank economist Christoph Weil.
The region's biggest economy, Germany, slowed in the third quarter
to post a 0.2-per cent growth rate, while GDP in neighbouring
Netherlands slumped by a more-than-forecast 1.1 per cent from the
previous three months.
However, France, the eurozone's second biggest economy, reported a
surprise 0.2-per-cent expansion rate. Analysts had forecast growth to
be flat in the country in the three months to the end of September.
The Italian economy also turned in a slightly better-than-forecast
performance, with the eurozone's third-biggest economy contracting by
0.2 per cent.
Economists had expected the Italian statistics office to say the
nation's economy had shrunk by 0.5 per cent.
Still, the third-quarter slump in Italy means that the nation has
reported negative growth for five straight quarters.
For the EU as a whole, GDP expanded by 0.4 per cent in the third
quarter year-on-year, after contracting by 0.3 per cent in the second
quarter.
