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Eurozone slips into another recession in Q3
Source: Agencies |
November 16, 2012, Friday
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Print Edition
Print Edition
THE eurozone fell into a recession in July-September, the second since the global financial crisis in 2009, as French resilience could not make up for a slump across Europe and the three-year debt crisis slowed Germany to a crawl.
Economic output in the 17-country eurozone fell 0.1 percent in the third quarter, the EU's statistics office Eurostat said, following a 0.2 percent drop in the second quarter.
Those two quarters of contraction put the eurozone's 9.4 trillion euro (US$12 trillion) economy officially in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
Germany and France, the eurozone's biggest economies, could not save the bloc from a double-dip recession even though both countries managed 0.2 percent growth in the quarter.
Large countries like Italy, Spain and the Netherlands all contracted and Belgium, a big exporter, stagnated.
Millions of people across Europe protested against government spending cuts that EU policymakers say are crucial to ending the debt crisis but which others blame for the economic contraction.
"We are now getting into a double dip recession which is entirely self-made," said Paul De Grauwe, an economist with the London School of Economics. "It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else," he said.
Not everyone shares that view and the European Commission says labor costs are falling and exports are rising for Greece, Portugal, Spain and Ireland, arguing that austerity is a necessary evil to bring down unsustainable budget deficits.
The European Commission sees a 0.4 percent contraction for the eurozone in all of 2012.
Hopes for a recovery next year are also fading, with the European Commission saying the economy will grow just 0.1 percent in 2013.
A rebound in the eurozone could be vital for the rest of the world.
The US and China are struggling with the impact of the crisis on their companies' ability to grow and prosper.
In one positive sign, Eurostat said separately that the eurozone's annual inflation fell to 2.5 percent in October from 2.6 percent in September.
Economic output in the 17-country eurozone fell 0.1 percent in the third quarter, the EU's statistics office Eurostat said, following a 0.2 percent drop in the second quarter.
Those two quarters of contraction put the eurozone's 9.4 trillion euro (US$12 trillion) economy officially in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.
Germany and France, the eurozone's biggest economies, could not save the bloc from a double-dip recession even though both countries managed 0.2 percent growth in the quarter.
Large countries like Italy, Spain and the Netherlands all contracted and Belgium, a big exporter, stagnated.
Millions of people across Europe protested against government spending cuts that EU policymakers say are crucial to ending the debt crisis but which others blame for the economic contraction.
"We are now getting into a double dip recession which is entirely self-made," said Paul De Grauwe, an economist with the London School of Economics. "It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else," he said.
Not everyone shares that view and the European Commission says labor costs are falling and exports are rising for Greece, Portugal, Spain and Ireland, arguing that austerity is a necessary evil to bring down unsustainable budget deficits.
The European Commission sees a 0.4 percent contraction for the eurozone in all of 2012.
Hopes for a recovery next year are also fading, with the European Commission saying the economy will grow just 0.1 percent in 2013.
A rebound in the eurozone could be vital for the rest of the world.
The US and China are struggling with the impact of the crisis on their companies' ability to grow and prosper.
In one positive sign, Eurostat said separately that the eurozone's annual inflation fell to 2.5 percent in October from 2.6 percent in September.
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