Eurozone’s economy heading towards recession
Strong exports limited the Eurozone’s economic contraction in the second quarter of this year despite falling investment, inventories and private consumption that point to output shrinking overall in 2012.
The EU’s statistics office Eurostat confirmed today that gross domestic product in the 17 countries using the euro fell 0.2 per cent quarter-on-quarter. It revised the year-on-year fall to 0.5 per cent from a previously reported 0.4 per cent.
The debt crisis that began in Greece nearly three years ago has crushed Europe’s efforts at recovery from the 2008/2009 global financial crisis, probably sending the bloc into recession for the second time in just three years.
“Weakness is the name of the game,” said Joost Beaumont, a senior economist at ABN AMRO in Amsterdam. “We see another contraction in the third quarter because domestic demand will be hit by fiscal consolidation, rising unemployment, tight credit conditions and the high uncertainty of the Eurozone crisis.”
The Eurozone would already be in a technical recession, were it not for flat output in the first three months of the year, after a 0.3 per cent quarterly contraction in the last quarter of 2011.
Eurostat said a fall in household consumption subtracted 0.1 per cent from the final quarterly GDP figure and shrinking investment and inventories took away 0.2 per cent points each, compared with the previous three months.