European Union statistics office Eurostat said Thursday that gross domestic product in the 17-country euro zone contracted by 0.1 percent the third quarter, sending the one-currency region’s economy into its second recession since the global financial crisis in 2009. Compared to the third quarter of 2011, GDP was lower by 0.6 percent.
A recession is widely accepted as two consecutive quarters of shrinking gross domestic product. GDP in the euro zone fell by 0.2 percent during the second quarter. In the 27-country European Union, GDP rose 0.1 percent in the third quarter.
Growth in Germany remains stubbornly slow, but the leading European country reported 0.2 percent growth in the July to September quarter. Concerns are growing quickly about Germany. Although GDP has grown in each of the first three quarters of 2012, growth has shriveled from 0.5 percent in Q1 to 0.3 percent in Q2 to 0.2 percent growth in Q3; signaling that demand for German products is slacking.
France, the second biggest euro zone economy, surprised with 0.2 percent GDP expansion in the third quarter.
Advancements by Germany and France couldn’t offset losses in other countries. Smaller GDP figures were logged by Italy (-0.2 percent), the Netherlands (-1.1 percent) and Spain (-0.3 percent). Belgium, a large euro zone exporter, had a flat quarter.
Several euro zone members are in or teetering on recessions, but Greece is going into its sixth year of an outright depression and facing nearly insurmountable mountains of debt and ridiculously high unemployment. The third quarter saw is financial slump deepen as annualized output contracted 7.2 percent. GDP results released on Tuesday showed the Greek economy contracting for a 17th straight quarter. With a strict budget recently passed by Prime Minister Antonis Samaras, the depression will not end anytime soon because of all the spending cuts. The debt-riddled country is still struggling to come-up with acceptable plans to receive it next much-needed round of bailout funds from the European Central Bank and International Monetary Fund.
Portugal and Ireland are also currently receiving bailout funds with Spain and Cyprus recently joining the bailout line in a quest to receive external financial assistance.
With the third-quarter contraction, the euro zone economy is now worth 9.4 trillion euro ($12 trillion).
Last week, the European Commission slashed its 2013 growth forecast for the euro zone economy to 0.1 percent, down from a May projection of 1 percent as the region’s growth grinds to a halt. The downward revision was sparked by a stark reduction in Germany’s growth forecast, which was dropped from 1.7 percent to 0.8 percent for the year.
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