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Eurozone recession worries

February 14, 2013

The latest figures from the European Union's statistics agency have revealed that the 17-member euro area is in a deepened recession. The final quarter of 2012 saw the bloc's economy contract more than expected.

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The recession in the eurozone deepened sharply in the fourth quarter of last year, Eurostat figures showed on Thursday. The 17-member bloc's economy shrank by 0.6 percent quarter-on-quarter.

Analysts said the figures were worst than expected and not least a result of Europe's biggest economy now also being dragged into the crisis, with Germany logging a 0.6-percent contraction of gross domestic product in the fourth quarter of 2012.

Compared with output in the same quarter of 2011, the eurozone economy contracted by 0.9 percent, Eurostat reported.

Consumer prices revised down

"The outlook for 2013 remains subdued," ING Bank analyst Peter Vanden Houte said in a statement, pointing to political uncertainty in Italy and other factors. "While a gradual improvement of the world economy is likely to support European exports, domestic demand is bound to remain very weak as fiscal tightening and rising unemployment will take their toll."

According to the European Central Bank's quarterly Survey of Professional Forecasters, the eurozone economy will not grow at all this year and will only expand by 1.3 percent in 2014.

It also said inflation in the eurozone would hover around 1.8 percent this year and next year. Forecasters said their expectations reflected weaker economic activity and more favorable developments in commodity prices.

hg/pfd (AP, AFP)