The euro-area recession deepened more than economists forecast with the worst performance in almost four years as its three biggest economies suffered slumping output.
Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today.
That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey.
The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter.
European Central Bank President Mario Draghi said last week that confidence in the 17-nation region has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”
“The decline in uncertainty about the future of the single-currency area and easing financial conditions have sowed the seeds for an economic recovery,” said Nick Kounis, an economist at ABN Amro Bank NV in Amsterdam.
“However, ongoing severe budget cuts, rising unemployment and bank deleveraging suggest that the recovery will be excruciatingly slow.”
The euro extended its decline against the dollar after the data were released. It fell 0.9 percent to $1.3338 as of 10:02 a.m. London time.The single currency also weakened versus the pound.
Widespread Slump
From a year earlier, the euro-area economy shrank 0.9 percent in the fourth quarter, the statistics office said. In 2012, it contracted 0.5 percent.
Data earlier today showed the German economy, Europe’s largest, shrank 0.6 percent in the fourth quarter, while French GDP fell 0.3 percent.
Both contractions exceeded the median forecasts of economists in Bloomberg surveys. Italy’s economy shrank 0.9 percent, also more than expected and a sixth straight contraction.
In Greece, which doesn’t publish quarter-on-quarter data, GDP fell 6 percent in the fourth quarter from the same period a year earlier.
Measures by the ECB to stem the debt turmoil have eased the worst strains and helped to reduce sovereign bond yields.
The yield on Spain’s 10-year debt is about 5.2 percent, down from more than 7.5 percent in July.
Stabilization
“We do believe the worst is behind us,” said Frederik Ducrozet, an economist at Credit Agricole SA in Paris.
“We may have some very modest contraction in the first quarter, some stabilization in the second quarter and stronger recovery building up in the second half of this year.”
In Japan, data showed the economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption, bolstering Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation.
GDP fell an annualized 0.4 percent, following a revised 3.8 percent fall in the previous three months. The median forecast of economists in a survey was for 0.4 percent growth. Some reports have also pointed to an easing in the recession in the euro area since the start of this year.
While industrial production fell 2.4 percent in the fourth quarter, it rose 0.7 percent in December, more than economists forecast. Surveys of manufacturing and services improved in January, separate reports show.
Downside Risks
Still, the ECB has predicted that the euro zone’s economy will shrink 0.3 percent this year. Heineken NV, the world’s third-biggest brewer, said yesterday it sees volume weakness this year in European markets “affected by continued economic uncertainty and government-led austerity measures.”
ThyssenKrupp AG, Germany’s biggest steelmaker, said on Feb. 8 that it intends to make savings in its European steel business by cutting more than 2,000 jobs.
With Draghi warning that “downside” risks remains, French Finance Minister Pierre Moscovici said on Feb. 11 that countries need to coordinate their policies to ensure that the region returns to growth as quickly as possible. “Every country needs to take measures that are appropriate for its own situation,” Moscovici said.
“There is also a collective problem, it’s in no one’s interest that Europe be a slow-growth area.”
In the 27-nation European Union, GDP fell 0.5 percent in the fourth quarter from the previous three months and 0.6 percent on the year.
The statistics office is scheduled to publish a breakdown of fourth-quarter GDP next month.
bloomberg.com
Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today.
That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey.
The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter.
European Central Bank President Mario Draghi said last week that confidence in the 17-nation region has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”
“The decline in uncertainty about the future of the single-currency area and easing financial conditions have sowed the seeds for an economic recovery,” said Nick Kounis, an economist at ABN Amro Bank NV in Amsterdam.
“However, ongoing severe budget cuts, rising unemployment and bank deleveraging suggest that the recovery will be excruciatingly slow.”
The euro extended its decline against the dollar after the data were released. It fell 0.9 percent to $1.3338 as of 10:02 a.m. London time.The single currency also weakened versus the pound.
Widespread Slump
From a year earlier, the euro-area economy shrank 0.9 percent in the fourth quarter, the statistics office said. In 2012, it contracted 0.5 percent.
Data earlier today showed the German economy, Europe’s largest, shrank 0.6 percent in the fourth quarter, while French GDP fell 0.3 percent.
Both contractions exceeded the median forecasts of economists in Bloomberg surveys. Italy’s economy shrank 0.9 percent, also more than expected and a sixth straight contraction.
In Greece, which doesn’t publish quarter-on-quarter data, GDP fell 6 percent in the fourth quarter from the same period a year earlier.
Measures by the ECB to stem the debt turmoil have eased the worst strains and helped to reduce sovereign bond yields.
The yield on Spain’s 10-year debt is about 5.2 percent, down from more than 7.5 percent in July.
Stabilization
“We do believe the worst is behind us,” said Frederik Ducrozet, an economist at Credit Agricole SA in Paris.
“We may have some very modest contraction in the first quarter, some stabilization in the second quarter and stronger recovery building up in the second half of this year.”
In Japan, data showed the economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption, bolstering Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation.
GDP fell an annualized 0.4 percent, following a revised 3.8 percent fall in the previous three months. The median forecast of economists in a survey was for 0.4 percent growth. Some reports have also pointed to an easing in the recession in the euro area since the start of this year.
While industrial production fell 2.4 percent in the fourth quarter, it rose 0.7 percent in December, more than economists forecast. Surveys of manufacturing and services improved in January, separate reports show.
Downside Risks
Still, the ECB has predicted that the euro zone’s economy will shrink 0.3 percent this year. Heineken NV, the world’s third-biggest brewer, said yesterday it sees volume weakness this year in European markets “affected by continued economic uncertainty and government-led austerity measures.”
ThyssenKrupp AG, Germany’s biggest steelmaker, said on Feb. 8 that it intends to make savings in its European steel business by cutting more than 2,000 jobs.
With Draghi warning that “downside” risks remains, French Finance Minister Pierre Moscovici said on Feb. 11 that countries need to coordinate their policies to ensure that the region returns to growth as quickly as possible. “Every country needs to take measures that are appropriate for its own situation,” Moscovici said.
“There is also a collective problem, it’s in no one’s interest that Europe be a slow-growth area.”
In the 27-nation European Union, GDP fell 0.5 percent in the fourth quarter from the previous three months and 0.6 percent on the year.
The statistics office is scheduled to publish a breakdown of fourth-quarter GDP next month.
bloomberg.com
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