Eurozone slides back into recession
LONDON, England — THE 17-country eurozone has fallen back into recession for the first time in three years as the fallout from the region’s financial crisis was felt from Amsterdam to Athens.
And with surveys pointing to increasingly depressed conditions across the 17-member group that uses the euro at a time of high unemployment in many countries, there are fears that the recession will deepen, and make the debt crisis — which has been calmer of late — even more difficult to handle.
Official figures yesterday showed that the eurozone contracted by 0.1 per cent in the July to September period, from the quarter before, as economies including Germany and the Netherlands suffer from falling demand.
The decline reported by Eurostat, the EU’s statistics office, was in line with market expectations and follows on from the 0.2 per cent fall recorded in the second quarter. As a result, the eurozone is officially in recession, commonly defined as two straight quarters of falling output.
“The eurozone economy will continue its decline in Q4 and probably well into 2013 too — a good backdrop for another debt crisis,” said Michael Taylor, an economist at Lombard Street Research.
Because of the eurozone’s gruelling three-year debt crisis, the region has been the major focus of concern for the world economy. The eurozone economy is worth around ¤9.5 trillion ($1.1 qadrillion) which puts it on a par with the US. The region, with its 332-million people, is the US’s largest export customer, and any fall-off in demand will hit order books.
While the US has managed to bounce back from its own savage recession in 2008-09, albeit inconsistently, and China continues to post still-strong growth, Europe’s economies have been on a downward spiral — and there is little sign of any improvement in the near term.
The eurozone had managed to avoid returning to recession for the first time since the financial crisis following the collapse of US investment bank Lehman Brothers, mainly thanks to the strength of its largest single economy, Germany.
But even that country is now struggling as confidence wanes and exports drain in light of the economic problems afflicting large chunks of the eurozone.
Germany’s economy grew 0.2 per cent in the third quarter, down from a 0.3 per cent increase in the previous quarter. Over the past year, Germany’s annual growth rate has more than halved to 0.9 per cent from 1.9 per cent.
Perhaps the most dramatic decline among the eurozone’s members was seen in the Netherlands, whose economy shrank 1.1 per cent on the previous quarter.