The euro-zone economy contracted in the fourth quarter of 2011 for the first time since the second quarter of 2009 as nine member states posted a fall--five of which entered a recession--increasing concerns the wider region will follow in the first three months of 2012, as the impact of the debt crisis continues to bite, data showed Wednesday.Data from European statistics agency Eurostat showed that gross domestic product across the 17 regions that share the euro contracted 0.3% in the final quarter of 2011 compared with the third, and grew 0.7% compared with a year earlier. That is the first quarterly contraction since a 0.2% drop in the second quarter of 2009, while the year-on-year gain is the smallest since the fourth quarter of 2009 when GDP shrank 2.1%.
And, for the whole of 2011, Eurostat calculates GDP grew 1.5%, down from 1.9% growth in 2010.
The data were marginally better than expected--economists surveyed by Dow Jones Newswires had forecast that GDP shrank 0.4% on the quarter and rose 0.7% on the year--probably due to unexpected growth in France of 0.2% on the quarter in the final three months of last year and a smaller-than-expected decline in Germany over the same period.
"The GDP news on the struggling southern periphery euro-zone economies made largely grim reading," said Howard Archer, chief euro-zone and U.K. economist for IHS Global Insight. "Despite some recent improved euro-zone surveys and evidence that Germany is returning to growth, we doubt that the euro zone will be able to avoid further contraction in the first quarter and very possibly the second."
Five euro-zone member economies are now confirmed as being in recession. Data from the Netherlands and Italy earlier Wednesday and Portugal and Greece Tuesday reported sharp quarterly contractions in the fourth quarter of 2011 and confirmed all regions are now in recession. And, the Eurostat release also reported that Belgian GDP fell 0.2% on the quarter in the fourth quarter of last year, following a 0.1% drop in the third quarter.
The technical definition of recession is two consecutive quarters of contracting gross domestic product.
Germany was among the remaining four economies which posted contraction in the fourth quarter of last year, but that followed growth in the third quarter, and economists aren't expecting a recession in Germany this year.
Other data published Wednesday by Eurostat showed the euro-zone goods trade surplus rose to EUR9.7 billion in December from EUR6.3 billion in November. In December 2010, the euro zone printed a trade deficit of GBP1.7 billon.
That was better than expected as economists surveyed by Dow Jones Newswires had forecast the surplus would increase only marginally to EUR6.9 billion.
Eurostat also reported that for the whole of 2011 the euro-zone global goods trade deficit narrowed to EUR7.7 billion from EUR14.7 billion in 2010.
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