News / Europe

    Germany Can't Stop Eurozone From Sinking Into Longest Recession

    European Economic and Monetary Affairs Commissioner Olli Rehn presents the European Commission spring economic forecasts and outlook expectations for EU member states, in Brussels, May 3, 2013.
    European Economic and Monetary Affairs Commissioner Olli Rehn presents the European Commission spring economic forecasts and outlook expectations for EU member states, in Brussels, May 3, 2013.
    Reuters
    Germany's economy crept back into growth at the start of the year but not by enough to stop the euro zone from contracting for a sixth straight quarter, and France slid into recession.

    Falling output across the bloc meant the 17-nation economy is in its longest recession since records began in 1995.

    It shrank 0.2 percent in the January to March period, the EU's statistics office Eurostat said on Wednesday, worse than the 0.1 percent contraction forecast by a Reuters poll.

     “The misery continues,'' said Carsten Brzeski, a senior economist at ING in Brussels. “Almost all core countries bar Germany are in recession and so far nothing has helped in stopping this downward spiral.

    As well as France, the economy shrank for the quarter in Finland, Cyprus, Italy, The Netherlands, Portugal and Greece. Data last month showed Spain's economy contracted  for a seventh consecutive quarter.

    Germany, which generates almost a third of the euro zone's economy, grew by a weaker than expected 0.1 percent, skirting the recession that France succumbed to, but highlighting the devastating impact of the euro zone's debt and banking crisis that has driven unemployment to a record 19 million people.

    France's downturn was its first in four years, after contracting by 0.2 percent in the first three months of the year, as it did in the last quarter of 2012.

    Italy, the euro zone's third largest economy, reported its seventh consecutive quarter of decline, the longest since records began in 1970.

    The euro zone's recession is now longer than the five quarters of contraction that followed the global financial crisis in 2008/2009, although it is not as deep.

    The euro fell to a six-week low against a buoyant dollar, hurt by the anemic figures which kept alive chances of more monetary easing by the European Central Bank.

     The ECB cut rates to a record low earlier this month and its head, Mario Draghi, said it was ready to act again if the economy worsened.

    Some EU leaders, who meet for a summit in Brussels next week/ are also trying to shift away from the budget cuts that have dominated the response to the debt crisis since 2009.

    But it will be tough for another rate cut and a softening of austerity - even if either happens - to break a cycle in which governments are cutting spending, companies are laying off staff, Europeans are buying less and young people have little hope of finding a job.

    ''Any recovery is going to be excruciatingly slow,” said Nick Kounis, head of macroeconomic research at ABN AMRO.

    A Reuters poll of 65 economists suggested growth should return in the second half of this year, but there will no strong recovery until at least 2015.

    Recovery?

    Interest rates at a record low and the ECB's promise to buy the bonds of struggling governments have calmed talk of a euro zone break-up, driving up equities and cooling bond yields.

    But the reality for companies and households is of tight credit and frozen investment, meaning demand in places such as China and the United States is the best hope for renewed growth.

    Of most concern is the difference between Europe's two largest economies, Germany and France. It looks narrow over the first three months of the year, but European diplomats and officials fear France will continue to lag far behind, threatening the cohesion of the twin policy motor that has traditionally driven the European project.

    French growth has faltered as unemployment undermines the confidence of both consumers and businesses, which are struggling to cope with government belt-tightening while Spain remains deep in the mire.

    Even Germany will find it difficult to reach take-off speed alone. Its statistics office revised down its figure for the end of 2012 to show a contraction of 0.7 percent, from 0.6 percent.

    Thomas Gitzel at VP Bank sees a stronger performance in the second quarter as construction, hit by the winter, bounces back.

    ''The current global economic backdrop makes a sustained recovery more unlikely. Difficulties in France and disappointing growth figures from China are strewing stones in the path of the Germany economy," added Gitzel. "Hopes of significantly higher growth could be premature.”

    The latest GDP figures will add fuel to a burgeoning debate about how to balance the need to cut debt with measures to foster growth.

    Italian and French leaders have been vocal in calling for an end to austerity and European Commission President Jose Manuel Barroso has said it has reached the limits of public acceptance.

    You May Like

    How Aleppo Rebels Plan to Withstand Assad's Siege

    Rebels in Aleppo are laying plans to withstand a siege by Syrian President Bashar al-Assad’s forces in likelihood the regime cuts a final main supply line running west of city

    Probe Targeting China's Statistic Head Sparks Concern

    Economists now asking what prompted government to launch an investigation only months after Wang Baoan had been vetted for crucial job

    HRW: Both Sides in Ukraine Conflict Targeted, Used Schools

    Rights group documents how both sides in Ukraine conflict carried out attacks on schools and used them for military purposes

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growthi
    X
    February 10, 2016 5:54 AM
    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Civil Rights Pioneer Remembers Struggle for Voting Rights

    February is Black History Month in the United States. The annual, month-long national observance pays tribute to important people and events that shaped the history of African Americans. VOA's Chris Simkins reports how one man fought against discrimination to help millions of blacks obtain the right to vote
    Video

    Video Jordanian Theater Group Stages Anti-Terrorism Message

    The lure of the self-styled “Islamic State” has many parents worried about their children who may be susceptible to the organization’s online propaganda. Dozens of Muslim communities in the Middle East are fighting back -- giving young adults alternatives to violence. One group in Jordan is using dramatic expression a send a family message. Mideast Broadcasting Network correspondent Haider Al Abdali shared this report with VOA. It’s narrated by Bronwyn Benito
    Video

    Video Migrant Crisis Fuels Debate Over Britain’s Future in EU

    The migrant crisis in Europe is fueling the debate in Britain ahead of a referendum on staying in the European Union that may be held this year. Prime Minister David Cameron warns that leaving the EU could lead to thousands more migrants arriving in the country. Meanwhile, tension is rising in Calais, France, where thousands of migrants are living in squalid camps. VOA's Henry Ridgwell reports.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Families Flee Aleppo for Kurdish Regions in Syria

    Not all who flee the fighting in Aleppo are trying to cross the border into Turkey. A VOA reporter caught up with several families heading for Kurdish-held areas of northern Syria.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.