News Column

Eurozone Fell Deeper Into Recession at End of 2012

February 14, 2013

Andrew McCathie


The eurozone economy contracted at its fastest pace since the 2009 recession during the final quarter of 2012, when it shrank by a more-than-forecast 0.6 per cent, data released Thursday showed.

The quarter-on-quarter contraction came after the 17-member currency bloc's economy slumped by 0.1 per cent in the third quarter, the European Union statistics office Eurostat said.

The fall in fourth-quarter gross domestic product (GDP) came amid slowdown in global trade as well as moves by governments across the region to slash high debt-and-deficit levels

Analysts had expected the data to show the eurozone economy shrank by 0.4 per cent in the fourth quarter.

GDP in the eurozone plunged by 2.8 per cent at the start of 2009 after the world economy tumbled into recession following the global financial crisis.

For the full year 2012, the currency bloc's economy contracted by 0.5 per cent after the region posted three consecutive quarterly falls in GDP.

"We do not expect a sharp recovery of activity any time soon," said BNP Paribas bank economist Clemente De Lucia, pointing to the impact of record high unemployment on private consumption and weak corporate investment.

The fourth-quarter contraction was broad based across the eurozone with the region's two biggest economies - France and Germany - posting bigger-than-forecast falls.

While Germany's economy slumped 0.6 per cent in the final quarter, France contracted by 0.3 per cent.

French Prime Minister Jean-Marc Ayrault admitted Wednesday evening that, faced with slower-than-expected growth, the country would probably miss its target of a 3 per cent budget deficit.

Nations that have been particularly hard-hit by the long-running debt crisis reported even bigger falls in GDP.

While Italy contracted by 0.9 per cent, Portugal suffered a 1.8-per-cent slump and Spain declined 0.7 per cent.

When compared with the same quarter in 2011, Portugal's GDP was down 3.8 per cent while Greece's economy saw a staggering 6-per-cent fall. Year on year, Italy's economy lost 2.7 per cent in the final quarter.

The bleak Italian growth data came as political parties in the eurozone's third biggest economy enter the final stages of the campaign for this month's national election.

A detailed breakdown of the overall eurozone data is not expected until early next month.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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