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

Captured IS Militants Explain Why They Fought

Fighters from Turkey, Syria tell VOA Kurdish Service what drew them to extremism, jihad More

Security Experts Split on Kenyan Barrier Wall

Experts divided on whether initiative aiming to keep out al-Shabab militants is long-awaited solution or misguided effort More

Video Philippines Wants Tourists Spending Money at New Casinos

Officials say they hope to turn Manila into the next Macau, which has long been Asia’s gambling hub More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More