EU is officially in recession

Press conference by Olli Rehn, Vice-President of the EC, on the autumn economic forecasts for 2012-2014. (EC Audiovisual Services).

Press conference by Olli Rehn, Vice-President of the EC, on the autumn economic forecasts for 2012-2014. (EC Audiovisual Services).

Eurostat, the statistical service of the European Union, confirmed yesterday with its regular third estimate, that during the last quarter of 2012 the Gross Domestic Product fell by 0.6% in the Euro area and by 0.5% in the EU27, in comparison with the previous three-month period of the same year. Eurostat’s third regular GDP estimation is done approximately 100 days (t+100) after the end of each quarter. Earlier estimates of GDP growth in each quarter are compiled at about t+45 days (GDP flash) and t+65 days (second GDP release, including breakdowns by expenditure components and gross value added by industries).

GDP developments in the last quarter of 2012 in comparison with the same period of 2011 were even more discouraging. According to the same source, “compared with the same quarter of the previous year, seasonally adjusted GDP fell by 0.9% in the euro area and by 0.6% in the EU-27 in the fourth quarter of 2012, after -0.7% and -0.4% respectively in the previous quarter”.

Unfortunately there is strong evidence that the negative developments in the European economy towards the end of 2012 continue well into the current year. Apart from the €-coin index which estimates that Eurozone’s GDP also fell in the first quarter of 2013, the governor of the European Central Bank, in his regular monthly interview on Thursday appeared also pessimistic.

Mario Draghi, while presenting ECB’s economic analysis for the present conjuncture said: “Recent data and indicators confirm that the economic weakness extended into the early part of the year (2013)…This economic outlook for the euro area remains subject to downside risks. The risks include the possibility of even weaker than expected domestic demand and slow or insufficient implementation of structural reforms in the euro area. These factors have the potential to dampen the improvement in confidence and thereby delay the recovery”.

Coming back to statistics among member states for which data on GDP growth are available for the fourth quarter of 2012, increases were recorded in Luxembourg (1.6 %), Latvia (+1.4%), Estonia (+0.9 %) and Lithuania (+0.7 %) compared with the previous quarter, while Portugal (-1.8 %), Cyprus and Slovenia (both -1.0 %) suffered the largest GDP losses.

Concerning the components of GDP, losses were recorded all across the board. According to Eurostat, “during the fourth quarter of 2012, household final consumption expenditure fell by 0.5% in the euro area and by 0.3% in the EU27 (after -0.2% and -0.1% respectively in the previous quarter). Gross fixed capital formation dropped by 1.2% in the euro area and by 1.0% in the EU27 (after -0.8% and -0.7%). Exports decreased by 0.8% in the euro area and 0.9% in the EU27 (after +0.9% in both zones). Imports declined by 0.9% in both zones (after +0.1% in the euro area and 0.0% in the EU27)”.

 

 

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