Arab Today, arab today eurozone sinking into recession
Last Updated : GMT 08:53:10
Arab Today, arab today
Arab Today, arab today

Eurozone sinking into recession

Arab Today, arab today

Arab Today, arab today Eurozone sinking into recession

Brussels - AFP

The latest growth data indicated Tuesday that the eurozone is sinking into recession, thanks to a vicious circle of sharp cutbacks in government and household expenditure, and reduced bank lending. Saved on this occasion by a summer pick-up in German consumer spending, EU figures showed just a 0.2 percent expansion for the debt-burdened 17-nation eurozone between July and September. While that meant no change from the previous three months, output in Italy and the Netherlands shrank -- the former is caught in a debt crisis spiral and the latter is a gilt-edged model eurozone economy. The tiny eurozone growth increase \"may well be as good as it gets,\" said London-based IHS Global Insight analyst Howard Archer. \"We expect to see gross domestic product (GDP) contract by around 0.25 percent quarter-on-quarter in both the fourth quarter of 2011 and the first quarter of 2012,\" he underlined. That means the eurozone faces a recessionary Christmas, while growth will flatline in 2012 as a whole, Archer said. Germany\'s relatively strong quarterly growth came from a low comparative base over the previous three months when nuclear power plants were shut following Japan\'s Fukushima reactor disaster. Its economy grew 0.5 percent, followed by 0.4 percent in France but that was not enough to reassure investors as its borrowing costs rose sharply to produce a record spread between French and German benchmark 10-year bond yields. The Netherlands shrank 0.3 percent, the Eurostat data agency said. These figures compared with Eurostat\'s estimate of 0.6 percent growth in the United States -- where different means of calculation make direct comparisons difficult -- and 1.5 percent for Japan. Chris Williamson, chief economist with London-based Markit research firm, said the trend already \"points to a decline\" in Italy, where he tipped the rate of contraction to \"steepen dramatically in the fourth quarter.\" \"Italy looks set to be the first of the four largest euro nations to slide back into recession,\" he said, adding that he already detected signs of no growth in Spain. Ultimately, \"the combination of weaker global demand, austerity measures and uncertainty caused by the sovereign debt crisis is also likely to cause downturns in both Germany and France.\" He refused to rule out \"a serious double-dip recession,\" a position echoed by Daniele Antonucci of Morgan Stanley Research, again in London. \"Even a full-blown recession can no longer be excluded if an outright credit crunch materialises,\" Antonucci said. In Germany, the head of the closely-watched economic expectations index took a more pessimistic line than national politicians after the ZEW survey produced its lowest outcome since October 2008. \"Global trade is weakening and debt problems in the euro area and in the United States are putting a blight on the economy,\" said Wolfgang Franz. Christian Schulz, a senior economist with Germany\'s oldest private bank, Berenberg Bank, suggested the road to recovery could be longer than anticipated. \"This is likely to be the last quarter of significant growth for a while as the debt crisis is leading the economy to slip into a mild recession in the winter,\" he said.  

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