Eurozone falls into recession, expected to deepen
LONDON — 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 at a time of austerity and high unemployment, the recession is forecast to deepen, and make the debt crisis — which has been calmer of late — even more difficult to handle.
Official figures on Thursday showed that the eurozone contracted by 0.1 percent 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 percent fall recorded in the second quarter. As a result, the eurozone is technically in recession, commonly defined as two straight quarters of falling output.
The eurozone economy shrank at an annual rate of 0.2 percent during the July-September quarter, according to calculations by Capital Economics.
“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 grueling three-year debt crisis, the region has been the major focus of concern for the world economy. The eurozone economy is worth around $12.1 trillion, which puts it on a par with the United States. The region, with its 332 million people, is the United States' largest export customer, and any fall-off in demand will hit order books.
While the United States has managed to bounce back from its own recession in 2008-09, albeit inconsistently, and China continues to post strong growth, Europe's economies have been on a downward spiral — and there is little sign of any improvement in the near-term. Last week, the European Union's executive arm forecast that the eurozone's economy would shrink 0.4 percent this year. Then only a meager 0.1 percent growth in 2013.
The eurozone had avoided returning to recession since the financial crisis following the collapse of U.S. investment bank Lehman Brothers, mainly thanks to the strength of its largest single economy, Germany.
But even that country is now struggling as exports drain in light of the economic problems afflicting large chunks of the eurozone.
Germany's economy grew 0.2 percent in the third quarter, down from a 0.3 percent increase in the previous quarter. Over the past year, Germany's annual growth rate has been more than halved to 0.9 percent from 1.9 percent.
Germany's Chancellor, Angela Merkel, tried to strike a positive note when she spoke to reporters in Berlin on Thursday.
“I think we all are working on getting back on our feet again rapidly,” she said.
“We see that economic growth is slowing, that overall we have a small drop in the eurozone but I'm also very optimistic that if we do our political homework ... we will again have growth after this small decline.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Everything is America’s fault, Putin says
- As oil prices fall, fear rises in Venezuela
- Canada balances security, openness
- Attack on Egypt army post in Sinai peninsula kills 30 troops
- Miss Uganda hopefuls get dirty in agriculture phase of contest
- Sweden calls off search for mystery submarine
- China to test lunar orbiter
- Kobani ground defense struggles
- Gunman in Ottawa attack had been waiting for passport to go to Syria
- Iraq gives key posts to Sunni, Shiite men
- Sweden says credible reports of foreign submarine in its waters