Eurozone is back in recession

Tiffany Hsu / Los Angeles Times /


Published Nov 16, 2012 at 04:00AM / Updated Nov 19, 2013 at 12:31AM

The eurozone is back in a recession, its first in three years, as gross domestic product for the debt-plagued 17-nation bloc contracted 0.1 percent in the third quarter from the earlier quarter.

In the second quarter, the currency collective tightened 0.2 percent, according to the official European Union statistics agency, Eurostat. Two consecutive quarterly slips make a recession.

Compared with a year earlier, GDP is down 0.6 percent. Eurostat said last month that unemployment in the bloc was at a record high of 11.6 percent.

Protests and strikes rippled across Europe on Wednesday.

Growth in core countries such as Germany and France couldn’t counteract the plunges in long-struggling, austerity-bound nations such as Spain and Italy. Portugal took an especially nasty 0.8 percent dive.

Even countries that had been expanding took a dive, with the Netherlands experiencing a 1.1 percent squeeze and Austria contracting 0.1 percent. Germany saw its growth slow to 0.2 percent in the third quarter from 0.3 percent in the second.

France, however, reversed a string of flat or down quarters with 0.2 percent expansion.

The wider 27-member European Union escaped recession, its GDP advancing 0.1 percent in the third quarter after tightening 0.2 percent in the second. In Britain, fresh off the Summer Olympics, the economy boomed 1 percent after a 0.4 percent drop.

A separate Eurostat report Thursday showed annual inflation in the euro-currency area down to 2.5 percent in October, from 2.6 percent the previous month.

In a speech Thursday, European Central Bank President Mario Draghi urged governments to avoid tax increases in favor of spending cuts as a strategy for fiscal consolidation. He also stressed the need for “calm pragmatism going forward.”