WORLD
Euro Zone Recession Is Reinforced by Slump in a Second Quarter
Baku, November 19 (AZERTAC). The euro zone economy shrank for a second consecutive quarter, according to official data released Thursday, eliminating any doubt about whether the region is in recession and signaling that a long road to recovery remains.
Gross domestic product in the euro zone fell 0.1 percent in the three months through September compared with the previous quarter, according to Eurostat, the European Union statistics agency. The downturn was slightly less severe than in the second quarter, when growth contracted 0.2 percent. But it was the fourth consecutive quarter of no growth or a decline.
Perhaps more worrisome, the data showed that Spain, Portugal and several other countries remained far from the kind of recovery that would bring increased tax revenue and help them overcome their debt problems. European leaders, who have benefited from a tenuous calm on financial markets in recent months, are likely to face additional pressure to ease the government austerity programs that have undercut growth in Southern Europe.
But the central bank has already stretched its mandate to fight the crisis, and the burden may now fall primarily on government leaders. Germany could face added pressure to ease its insistence on drastic budget cuts by Spain, Greece, Italy and Portugal, especially after large protests in those countries this week.
Euro zone finance ministers are expected to meet next week to consider whether to release the next installment of aid for Greece, which it needs to avoid defaulting on its debt. Next month, European heads of government will hold a summit meeting to continue working on ways to make the common currency area more resilient, for example by pooling supervision of banks.
“The confidence shock will therefore continue to hinder investment and hiring decisions,” Mathilde Lemoine, an economist at HSBC, said in a note.