Recession looms as investors cut back

 
Tim Wallace
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HOUSEHOLD spending, investment and exports all fell in the final quarter of 2011, official statistics confirmed yesterday, prompting fears the Eurozone will suffer months of slow growth or even recession.

The broad based decline in activity dragged GDP down 0.3 per cent in the last three months of the year, compared with expansion of 0.3 per cent in the previous quarter.

GDP was up 0.7 per cent compared with the final quarter of 2010 and, thanks to downward revisions to earlier growth, took expansion over 2011 to just 0.7 per cent.

The worst published performer in the country was Portugal, where GDP fell 1.3 per cent, and Sweden, which contracted by 1.1 per cent.

The most recent Greek data comes from the second quarter of 2011, which fell 7.3 per cent compared with the same quarter of 2010.

Poland’s economy expanded 1.1 per cent in the final quarter, while Lithuania’s grew by one per cent.

The underlying outlook remains bleak – survey measures of export orders point to continued weakness in external demand, and domestic spending will continue to suffer the effects of draconian fiscal tightening,” said Jennifer McKeown from Capital Economics.

“Even in countries with relatively sound public finances like Germany, fears of more bail-outs for peripheral economies might prompt households to save rather than spend their income.”