(MENAFN - Khaleej Times) The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined.
Gross domestic product in the 17-nation currency bloc slipped 0.1 per cent in the third quarter from the previous three months, when it fell 0.2 per cent, the European Union's statistics office in Luxembourg said on Thursday, confirming an initial estimate published on November 15. Gross fixed capital formation dropped 0.7 per cent from the previous three months, when it fell 1.8 per cent, while consumer spending was unchanged. Government spending declined 0.2 per cent after a 0.1 per cent drop in the second quarter.
European governments, fighting the sovereign debt crisis that started in 2009, on November 27 eased the terms on emergency aid for Greece and are counting on a bond buyback as a market-based way of cutting the country's debt, paving the way for continued aid payouts. Economists question whether that will be enough to keep the country in the single currency.
"Greece will continue to go deeper into depression next year and possibly the year after that," Megan Greene, director of European economics at Roubini Global Economics, said in an interview on Bloomberg Radio on December 4. "The troika will be willing to just throw money at Greece until at least we've had the German elections and Spain and Italy by then will have asked for support from the bailout funds and the ECB."
Euro-region exports rose 0.9 per cent in the second quarter from the previous three months, when they advanced 1.6 per cent, Thursday's report showed. Imports increased 0.2 per cent after a 0.6 per cent rise.
In Germany, Europe's largest economy, GDP rose 0.2 per cent in the third quarter, down from 0.3 per cent in the previous three months. France's economy expanded 0.2 per cent, while Italy's GDP fell 0.2 per cent. In Spain, which locked in a bank bailout earlier this year, GDP declined 0.3 per cent. The economies of Cyprus, Austria, Portugal and the Netherlands also contracted.