European Contraction Finally Hits Germany But Fourth Quarter Decline For Zone May Prove To Be Recessionary Trough

Tuesday, January 15, 2013 07:07
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European Contraction Finally Hits Germany But Fourth Quarter Decline For Zone May Prove To Be Recessionary Trough

Tags: European crisis | European zone | world economy

The decline in European output in November may mean the union will report a third consecutive negative quarter for the last three months of 2012.
 
Even Germany, Europe’s largest economy, has succumbed to recessionary forces; the country reported its economy contracted during the fourth quarter of last year.

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Output for the Eurozone declined 3.7% over last year. It’s the biggest contraction since November 2009.
 
Industrial output for the zone contracted 3.6% on a year-over-year basis in October and 1.4% on a monthly comparison.
 
November was weaker than expected, reporting a monthly rise of .2% and a year-over-year decline of 3.2%.
 
Until the last quarter of the year, Germany’s economy had continued to show growth even as the rest of Europe declined.
 
The decline in fourth quarter German gross domestic product (GDP) was deeper than expected, falling .5% against an expected fall of .2% or .3%.
 
Germany’s economy likely will not stay down for long since economic growth in other parts of the world is beginning to rebound and there are some indications in Europe that the worst in that area is over.
 
The euro has a trade surplus with the rest of the world that soared to record highs in November, rising to €13.7 billion from €4.9 billion in 2011.
 
The trade surplus generated increased economic activity during the first three quarters of 2012 although it was not strong enough to counter weak domestic demand during the second and third quarters.
 
The pattern evidently continued into the fourth quarter, which may prove to be the trough of the European recession.

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