Eurozone GDP sinks further in fourth quarter

Ben Southwood
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THE EUROZONE suffered another sliding quarter of output in the final three months of 2012, with worse-than expected contractions in both France and Germany.

The bloc’s GDP slid 0.6 per cent in the final quarter, Eurostat revealed yesterday, below the consensus forecast predicting a 0.4 per cent fall and capping off a yearly decline of 0.9 per cent.

But according to Capital Economics, what was most surprising was not the worse-than-expected fall but the fact that the currency area’s two biggest and so far most resilient economies – France and Germany – suffered unexpectedly sharp falls, of 0.3 and 0.6 per cent respectively.

The worst GDP blows were saved for crisis-hit Portugal, Spain, Italy and Greece. Spanish GDP fell 0.7 per cent in the fourth quarter, to cap off a 1.8 per cent slide over the year. Italian GDP plunged 0.9 per cent between October and December, leaving it 2.7 per cent lower than a year before. Portuguese output crashed 1.8 per cent in just three months, contributing to the 3.8 per cent slashed from its GDP over the year.

But as has been typical throughout the crisis, Greek woe put other Southern European economic problems into perspective. GDP was down six per cent over the year, according to official figures. And unemployment soared to 27 per cent in November, separate official data showed, up some 6.2 percentage points in just a year.

Capital’s Johnathan Loynes said that survey data since then, though improved, suggests the zone has more gloom to come. “For now at least, survey indicators are not strong enough to suggest that the Eurozone has pulled out of recession,” Loynes judged.

The only bright sparks in the data were the baltic states: Latvia enjoyed 5.7 per cent growth during 2012, the data showed, while Estonia’s economy grew 3.4 per cent and Lithuania’s GDP expanded by 3.1 per cent.