As Eurozone Economy Shrinks, Government Debt Loads Grow
Eurostat data released Thursday showed that for the second straight quarter the eurozone economy contracted. Output shrank by 0.1% in the July-September quarter, compared with the previous quarter.
The European Union's executive commission forecasts the eurozone economy will shrink 0.4% for all of 2012 and grow by just 0.1% in 2013.
Without growth, there's little chance of cutting into an 11.6% jobless rate, the highest since the euro was introduced in 1999. Unemployment tops 25% in Greece and Spain.
Even with a modest recovery in late 2013 and 2014, the eurozone economy will be smaller -- adjusted for inflation -- than it was in 2008, when the Great Recession reverberated around the world.Marco Valli, chief European economist for Unicredit, has charted recoveries from five crises going back to the late 1970s. He forecasts that the eurozone economy will not recover to its 2008 level until the first six months of 2015. "This is unusual, in that even during the major financial crisis of the past, we have never seen such a slow recovery from a financial crisis," he says.
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