By John Sexton
Figures released November 14 show that the Eurozone is officially in recession, following two quarters of negative growth. The aggregate economies of the region shrank by 0.2 percent in the third quarter, following a similar fall in the second. It is the first time the Eurozone has fallen into recession since the euro was introduced nine years ago.
Germany, the worlds leading exporter, was badly hit by a fall in demand for cars and machine tools and contracted by 0.5 percent in the third quarter. Italy matched the German decline, and Spain's economy, hit by problems in its housing market and construction industry, contracted by 0.2 percent.
Among the major Eurozone economies, France bucked the trend with surprise growth of 0.14 percent, after a 0.3 percent decline in the second quarter, but economists were quick to suggest this was more a statistical quirk than evidence that the country was outperforming its neighbors.
Analysts expect the European Central Bank to announce an interest rate cut in December. The bank has already cut rates by one percentage point since October to 3.25 percent. The October inflation figure for the Eurozone eased slightly to 3.2 percent in October, down from 3.6 percent in September, mainly due to falling energy prices.
With the UK, which is outside the Eurozone, already admitting it is in recession, and likely to give official confirmation of this when figures are released in January, most of the major EU economies are now in an economic downturn.
(China.org.cn November 15, 2008)
