The 17-nation eurozone economy is in recession for the second time in four years as governments imposed tougher budget cuts and leaders struggled to contain the debt crisis that broke out in October 2009.
Gross domestic product slipped 0.1 percent in the third quarter after a 0.2 percent decline in the previous three months, the European Union’s statistics office in Luxembourg said today. The result matched the median forecast in a Bloomberg News survey of 44 economists as small growth in Germany and France was outweighed by contractions elsewhere.
Europe’s economic malaise is deepening as governments across the region impose budget cuts to narrow their fiscal deficits. Spain and Cyprus this year joined the list of countries seeking external aid, following Greece, Portugal and Ireland. Unions across the region have held protests against austerity measures.
“Overall I think it’s remarkable that we haven’t seen so far in the last year a stronger decrease in economic activity considering the strength of the eurozone debt crisis,” Alexander Krueger, chief economist at Bankhaus Lampe in Dusseldorf, told Bloomberg. “Stopping the downward trend is the story for the first half of next year.”
In Germany, Europe’s largest economy, GDP rose 0.2 percent after a 0.3 percent gain in the previous three months. The French economy expanded 0.2 percent, rebounding from a 0.1 percent contraction in the second quarter. Italy and Spain contracted 0.2 percent and 0.3 percent, respectively. In the 27-country EU, GDP rose 0.1 percent.
Greece and Portugal published third-quarter GDP figures on Wednesday that showed the Greek economy contracting for a 17th straight quarter and the Portuguese economy completing its second year in recession. By the end of this year Greek output will have dropped by a fifth since it entered its recession in 2008.
Bloomberg said Europe’s economic gloom contrasts with signs of green shoots in the United States, where housing demand is strengthening and companies are hiring, and China, where factory output and retail sales are accelerating. The two countries are responsible for a third of the world economy.