News / Europe

European Economy Shrinks

Traders at their desks in front of the DAX board at the Frankfurt stock exchange, August 14, 2012.Traders at their desks in front of the DAX board at the Frankfurt stock exchange, August 14, 2012.
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Traders at their desks in front of the DAX board at the Frankfurt stock exchange, August 14, 2012.
Traders at their desks in front of the DAX board at the Frankfurt stock exchange, August 14, 2012.
Lisa Bryant
PARIS— Europe's two biggest economies have managed to dodge recession, but newly published statistics offer grim news for the region as a whole.  

New figures released by Eurostat statistical agency show the economies of both the eurozone and the 27-member European Union shrank by 0.2 percent in the second quarter of the year.

What is a Recession?

  • The economy has "negative growth," meaning it shrinks for 2 consecutive quarters (3 month periods)
  • Some economists say a recession becomes a depression if the economy shrinks by 10% or more
  • A shrinking economy can raise unemployment rates, depress stock and housing markets
The only glimmer of good news came from Germany and France. Growth for Europe's largest economy, Germany, was a modest 0.3 percent. And the second largest economy France managed to escape widespread expectations of recession by registering zero growth for a third consecutive quarter. Recession is defined as two successive quarters of negative growth.

Speaking on French radio, Economy and Finance Minister Pierre Moscovici offered a modestly upbeat reaction to the findings.

Moscovici said there were a few encouraging signs, including a small pickup in investment. But he said the fact that France's economy was faring slightly better than those of Italy and Spain was not good enough. Both economies contracted in the second quarters.

Analysts point to plenty of worrying indicators. French household consumption shrank in the second quarter and unemployment is just below 10 percent.

Economist Nicolas Bouzou, director of the Asteres group, told RTL radio that means the Socialist government in France faces daunting challenges as it tries to both encourage growth and employment and cut the deficit.

Experts are watching France carefully, fearing it may be the next country hit by the eurozone crisis. Some worry the fall may bring more bad news for the 17-nation currency area.

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by: Fritz from: Germany
August 16, 2012 3:25 PM
European Economy Shrinks... too many Muslimes... time to send them back to their Islamic countries...

by: Godwin from: Nigeria
August 15, 2012 2:48 PM
Righteousness exalts a nation; sin is a reproach to a people that forget their God. In those days Europe was concerned with teaching people that God exists. Today Europe needs re-evangelizing. Like the chosen people, the descendants of Abraham by Isaac they have forgotten where they started. The saying goes that if you forget where you're coming from, you as well forget where you're going to. That's exactly what's happening in Europe, USA and Canada today. And when that becomes the case, their state cannot but become worse until they trace their steps back and return to their Creator. Because children are now reared like zoo animals without human inclined orientation, they grow wild. No wonder shooting has become a daily occurrence out there. A scientist once said a life without an assumption of God is purposeless. The purposelessness in Europe and elsewhere is leading to fruitless endeavors because, "if the Lord does not guard the city, in vane does the watchman waste his sleep; unless the Lord builds the house, in vane does the workman waste his effort." Ps 127:1. The ungodly nations that seem to prosper is the captivity and exile of those who lose sight of their God. It is the mystery of God. It is the same God who does it. But the prosperity with which God's people are blessed usually far surpasses the riches of the ungodly when the prodigal sons return from the Far Country. Let him who has ears hear.

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