Euro zone falls into second recession since 2009

Thu Nov 15, 2012 9:46am EST
 
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By Robin Emmott and Michelle Martin

BRUSSELS/BERLIN (Reuters) - The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.

The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.

Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter.

Those two quarters of contraction put the euro zone's 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.

A rebound in Europe is still far off. The debt crisis that began in Greece in late 2009 is still reverberating around the globe and holding back a lasting recovery.

Analysts said even the euro zone's top two economies were likely to succumb in the final three months of the year.

"That was the last good number Germany for the time being," said Joerg Kraemer, chief economist at Commerzbank. "I don't expect the German economy to return to decent growth rates until the middle of next year.

Most economists expect Germany to contract in the fourth quarter for the first time since the end of 2011. And where Germany goes, France is likely to follow.   Continued...

 
Flags of Germany, France and the European Union flutter in the wind before the meeting of new French President Francois Hollande and German Chancellor Angela Merkel in Berlin, May 15, 2012. REUTERS/Tobias Schwarz