Eurozone debt now at 90% of GDP
Source: Agencies |
October 25, 2012, Thursday
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Print Edition
Print Edition
IN spite of years of harsh spending cuts and tax increases, Europe's debt problems are getting worse.
Figures from the EU's statistics office yesterday showed that, at the end of the second quarter, the total government debt of the 17 countries that use the single currency was worth 90 percent of the group's total economic output for the year - the highest level since the euro was launched in 1999.
The rise from the previous quarter's debt to gross domestic product ratio of 88.2 percent, and the previous year's equivalent of 87.1 percent, is a result of the eurozone's economic problems - which are making it harder for countries to handle their debts.
"The euro-area economy remains stuck in a rut," said James Ashley, senior European economist at RBC Capital Markets.
According to Eurostat, five of the countries that use the euro are in recession - Greece, Spain, Italy, Portugal, and Cyprus. Many analysts expect the eurozone to slip back into recession in the third quarter of this year when official figures are published next month. A recession is technically defined as two straight quarters of negative growth.
Other figures yesterday pointed to a deepening economic crisis in the eurozone. The Purchasing Managers' Index - a gauge of business activity - from financial information company Markit fell from the previous month's 46.1 to 45.8 in October - its lowest level in more than three years. Any figure below 50 indicates a contraction in activity.
Meanwhile, a closely watched survey from the Ifo Institute found business confidence in Germany, Europe's biggest economy, dropped for the sixth month in a row. Ifo's key figure for October dropped to 100 from 101.4 in September.
Germany is the main reason the eurozone has not fallen into recession. The country's powerhouse exporters, such as Volkswagen and BMW, have taken a slice of rising trade volumes around the world.
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