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Eurozone falls back into recession

2012-11-15 13:29:36

The eurozone has returned to recession as the region's debt crisis continues to

hurt demand, latest official statistics show.

The economy of the 17-nation bloc contracted by 0.1% between July and

September, after shrinking 0.2% in the previous three months, Eurostat said.

In comparison the UK grew by 1% in the quarter, while the US grew by 0.5%.

The eurozone was last in recession in 2009, when the economy contracted for

five consecutive quarters.

Analysts said that the eurozone was unlikely to have improved in the current

quarter.

"We are now talking about the fourth quarter already and there the figures show

that things are not looking as good," said Christian Schultz, an economist at

Barenberg Bank.

Export demand

The eurozone's largest economy, Germany, is still growing despite being

affected by the debt crisis.

Germany's economy grew by 0.2% in the July-to-September period, although this

was down from growth of 0.3% recorded in the previous quarter and the 0.5%

figure seen in the first three months of this year.

The country's growth was driven mainly by "foreign demand", federal statistics

office agency Destatis said.

Meanwhile, French gross domestic product rose by 0.2% in the third quarter

compared with the previous three months. But the previous quarter was revised

down to -0.1% from zero, according to French statistics agency Insee.

The production of goods and services in France, Europe's second-largest

economy, increased "after five quarters of near stagnation", it said.

For the whole of the European Union, which includes countries such as the UK

and Sweden, the economy grew by 0.2% in the quarter, after having contracted

0.2% in the previous three months.

The economy of the Netherlands shrank 1.1%, adding to signs that the

previously-healthy north of Europe is suffering as the southern parts push

through more austerity cuts in weak economies.

'Negative growth'

Last month, the German government cut its forecast for economic growth in 2013

from 1.6% to 1%, blaming the reduction on the eurozone crisis and weaker growth

in emerging nations in Asia and Latin America.

Germany's gross domestic product (GDP) grew by 4.2% in 2010 and 3% in 2011.

"The negative data seen in recent weeks and months could very well lead to

negative growth" in Germany in the fourth quarter of the year, said analysts at

Natixis Bank.

Unlike most of its partners in the 17-nation eurozone, Germany has mainly

escaped the worst effects of the crisis that has threatened to unravel the

bloc.

Until now, it has benefited from the weaker euro, making its exports more

competitive outside the eurozone.

However, German consumers are still spending. "Consumption by both private

households and government was higher than in the second quarter when adjusted

for price, seasonal and calendar variations," Destatis said.

Figures released in the past week from the eurozone's hardest hit economies

show that the Spanish economy contracted by 0.3% between June and September and

Portugal by 0.8%.

Greece said on Monday that its economy had contracted by 7.2% in the third

quarter compared with a year earlier. It did not give a comparison with the

preceding three months.

How some eurozone economies are faring

Q4 2011 Q1 2012 Q2 2012 Q3 2012

Eurozone -0.3 0 -0.2 -0.1

Germany -0.1 0.5 0.3 0.2

France 0 0 -0.1 0.2

Italy -0.7 -0.8 -0.7 -0.2

Spain -0.5 -0.3 -0.4 -0.3

Netherlands -0.6 0.2 0.1 -1.1

Portugal -1.4 -0.1 -1.1 -0.8

Source: Eurostat; figures show % change compared with previous quarter