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Eurozone double dips back into recession

November 16, 2012

The Eurozone slipped into a recession in July-September, the second since the global financial crisis in 2009, as French resilience could not make up for a slump across Europe and the three-year debt crisis slowed Germany to a crawl. Economic output in the 17-country euro area fell 0.1% in Q3 (matching the median estimate of 44 economists in a Bloomberg survey, Q2: -0.2%), Eurostat reported on Thursday. From the year-ago period, GDP dropped 0.6% (seasonally-adjusted basis, in line with analysts’ forecasts, Q2: revised up to -0.4%).

In Germany, Europe’s largest economy, gross domestic product grew 0.2% q-o-q (median expert projection: 0.1%, Q2: 0.3%). Meanwhile, France escaped recession as its economy unexpectedly expanded 0.2% in the three months ending September (market consensus: 0%) from a revised 0.1% contraction in the previous quarter. In contrast, Italy and Spain saw GDP shrink 0.2% and 0.3%, respectively. The wider 27-nation EU avoided recession after recording growth of 0.1% in the third quarter, largely thanks to an Olympics-related boost in the UK. A separate report from Luxembourg showed that Eurozone inflation eased to an annual rate of 2.5% last month (confirming the advance estimate issued on 31 October and economists’ projections, September: 2.6%). Month-on-month, consumer prices accelerated 0.2% (also matching forecasts, Sept.: 0.7%).