Open

Coming up

Don't miss

Replay


LATEST SHOWS

FOCUS

Bosnia: Hopes of change among disempowered citizens

Read more

REVISITED

In Prijedor, survivors fight to keep memory alive

Read more

IN THE PAPERS

¡Gracias, Gabo!

Read more

IN THE PAPERS

The Socialist rebellion grows

Read more

MEDIAWATCH

Algerian election: Bouteflika votes in wheelchair

Read more

REPORTERS

Indian election: Votes for sale

Read more

BUSINESS DAILY

Can Weibo win over US investors?

Read more

DEBATE

Algeria: What's the Choice? Incumbent Bouteflika Votes in Wheelchair (part 2)

Read more

DEBATE

Algeria: What's the Choice? Incumbent Bouteflika Votes in Wheelchair

Read more

  • Abel Ferrara’s hotly awaited DSK film to premiere on web

    Read more

  • Police seek arrest warrant for South Korea ferry captain

    Read more

  • Top Hollande adviser resigns over conflict of interest accusation

    Read more

  • In Prijedor, survivors fight to keep memory alive

    Read more

  • Indian election: Votes for sale

    Read more

  • Video: Tensions remain high in Mariupol despite Geneva deal

    Read more

  • Astronomers discover Earth-like planet that could support life

    Read more

  • West African Ebola outbreak caused by new strain of virus

    Read more

  • Nobel-winning Colombian writer Gabriel Garcia Marquez dies at 87

    Read more

  • Deadly avalanche strikes Everest in worst-ever disaster

    Read more

  • With a strong French presence, veterans and fresh faces, Cannes aims to please

    Read more

  • Low turnout reported in Algeria as Bouteflika seeks fourth term

    Read more

  • Russia and West agree on steps to ease Ukraine crisis

    Read more

  • Mob launches deadly attack on UN shelter for S. Sudan civilians

    Read more

  • Eurostar train mishap causes 'severe' delays

    Read more

  • Chelsea Clinton announces she's pregnant

    Read more

  • French troops free five aid workers kidnapped in Mali by Islamists

    Read more

  • In pictures: Iranian woman pardons son’s killer at the gallows

    Read more

  • After cup defeat, Spanish pundits read last rites for Barcelona

    Read more

  • India heads to polls in single largest day of voting

    Read more

  • Ukraine talks open in Geneva as Putin talks tough on TV

    Read more

  • Pro-Russian separatists killed in attack on Black Sea base

    Read more

  • Man executed in Texas for 2002 triple murder

    Read more

  • Scandal-hit French doctor Jacques Servier dies at 92

    Read more

  • Belgian head of wildlife reserve shot in DR Congo

    Read more

Europe

EU, eurozone economies shrink by 0.2% in 2nd quarter

©

Text by News Wires

Latest update : 2012-08-16

The economies of both the European Union and the 17-nation eurozone contracted by 0.2% in the second quarter of the year after posting no growth in the first quarter, official EU figures showed Tuesday.

AP - Europe is edging closer to recession, dragged down by the crippling debt problems of the 17-country euro bloc, official figures showed Tuesday.

Eurostat, the European Union’s statistics agency, revealed that the economies of both the eurozone and the wider 27-country EU shrank by a quarterly rate of 0.2 percent in the second quarter of the year. In the first quarter, output for both regions was flat. A recession is officially defined as two straight quarters of falling output.

Europe’s stumbling economy is making it harder for other economies around the world to recover and policymakers from all round the world are urging more decisive action, particularly from the European Central Bank, to deal with the crippling debt crisis to restore confidence to the global economy.

“The ECB’s recent announcement that it will do ‘whatever it takes’ to save the euro is welcome, but clarity over what will be done is crucial,” said Tom Rogers, a senior economic adviser for accounting firm Ernst & Young.

The region is the U.S.’s largest export customer and any fall-off in demand will hit order books -- as well as President Barack Obama’s election prospects.

The eurozone is grappling with sky-high debt levels and record unemployment of 11.2 percent. Compared with the year before, the eurozone’s economy is 0.4 percent smaller.

Without Germany continuing to post solid levels of growth, the eurozone would officially be in recession.

Europe’s largest economy grew by a quarterly rate of 0.3 percent in the second quarter. Though down on the 0.5 percent recorded in the first quarter, the advance was a little more than expected -- most economists thought Germany would only grow by 0.2 percent.

Though Germany currently benefits from strong demand for its products, its high-value exporters are finding it increasingly difficult to tap international markets. Forward-looking surveys, including Tuesday’s closely-monitored ZEW survey of German investor sentiment, are suggesting that confidence is taking a knock as Europe moves from one crisis point to another.

The other 16 countries that use the euro are Germany’s biggest export market and six of them are in recession. The U.S. is also coming off the boil, with growth in the second quarter down compared to the previous three months at 0.4 percent, according to Eurostat.

Slower economic growth is also making it harder for governments and central banks to control the debt crisis in Europe. Shrinking economies make it more difficult to get the public finances into shape. Lower output dents tax revenues while forcing up the cost of social benefits.

“The big picture is that the economic growth required to bring the region’s debt crisis to an end is still nowhere in sight,” said Jonathan Loynes, chief European economist at Capital Economics.

For those countries at the front-line of Europe’s debt crisis, the figures make for grim reading. Unsurprisingly, Greece is faring the worst -- its economy is 6.2 percent smaller than a year ago and back at the level it was in 2005.

Portugal, which has also been bailed out and enacting the tough austerity medicine, suffered a big 1.2 percent drop in output in the second quarter, compared with the previous quarter’s modest 0.1 percent drop.

Italy and Spain, the eurozone’s third and fourth largest economies, shrank by 0.7 percent and 0.4 percent respectively in the second quarter. Both countries are struggling to convince markets they have a strategy to get a grip on their debts. Spain has even acceded to a bailout of its banks.

Alexander Schumann, chief economist at The Association of German Chambers of Industry and Commerce, urged Europe’s indebted countries to carry on with their reforms and that it won’t be long before they start reaping the rewards.

“We need to be patient but there are positive signs that in 18 or 24 months we might see light at the end of the tunnel in Portugal, Spain, Italy and Greece, “he said. “We can get there if politicians don’t block the tunnel with ideas that add new uncertainty.”
 

Date created : 2012-08-14

  • ECONOMY

    World markets fall after ECB delays eurozone action

    Read more

  • ECONOMY

    France, Italy see “light at the end of the tunnel” for eurozone crisis

    Read more

  • EUROZONE

    Eurozone ready to activate bailout fund, official says

    Read more

Comments

COMMENT(S)