The Eurozone economy shrank more than expected in 2013, falling two tenths of one percent between January and March. The new data means the 17-nation currency bloc has now been in recession for six consecutive quarters – longer even than the deep recession that followed the global financial crisis of 2008.
Of the 17 nations that make up the common currency bloc – nine countries are now in recession.
While not as steep as the recession that came after the 2008 financial crisis – Commerzbank chief economist Jorg Kramer says this has been the longest.
“Usually a recession lasts only two, three, maximum four quarters. But six quarters is a lot. And to make the thing worse, the forward looking indicators such as the euro zone PMI, a gauge of manufacturing activity, these indicators have declined two months in a row. Therefore we really have a problem in the euro zone,” Kramer said.
ING senior economist Carsten Brzeski says in France, Europe’s second largest economy, what is now a double dip contraction for the French economy spells more trouble.
“We do see some very vague light at the end of the tunnel in Spain, in Greece, because there we do see that these structural reforms are working. In France, nothing has happened so far,”Brzeski said.
Even Europe’s powerhouse economy, Germany – just barely avoided recession, growing only one tenth of one percent between January and March this year.
With an overall population of more than half a billion people, the European Union is currently the world’s largest export market.
And that means a slowdown there could hurt the U.S. economy as well.
“I mean, Europe is in a recession, China is slowing, but right now, even our own fundamentals are really lukewarm at best, so we’ve got ourselves in this pattern that we’ve seen each of the past three years where the economy starts out great the first 3 or 4 months of the year, then we tend to hit a slowdown in about the second quarter,” said Bank Rate.com’s Greg Mcbride.
Analysts say government austerity measures in high debt countries such as Greece, Spain and Italy have contributed to record high unemployment within the currency union and to an economic slowdown that some forecasters say is unlikely to lift until well into 2014.