DHAKA: The eurozone`s economic woes persisted in the third quarter as Italy`s longest recession continued and a contraction in French output dragged growth down to 0.1 percent.

In the summer, hopes of a strong recovery were boosted by a second-quarter GDP rise of 0.3 percent, but the momentum of the first half of the year has fizzled out.

The figures gave weight to fears that high unemployment, low inflation and disagreements among political leaders over further moves towards integration will keep the currency zone locked into a prolonged period of low growth.

In France, a slump in exports and business investment failed to offset strong consumer spending to leave François Hollande`s socialist administration to cope with a 0.1 percent decline in GDP.

Italy, which has faced prolonged period of political instability, was also mired in economic gloom after a 0.1 percent decline in GDP in the third quarter extended the country`s recession from the summer of 2011 to nine quarters.

Of the smaller eurozone members, Austria returned to growth after a flat summer period with a 0.2 percent rise in GDP, while the Netherlands, which also flatlined in the summer, nudge 0.1 percent higher and Finland managed a 0.4percent expansion.

German growth fell from 0.7 percent in the second quarter to 0.3 percent, though several analysts said the eurozone`s powerhouse economy was merely returning to its expected annualised rate of 1.2 percent a year.

Chris Williamson, chief European economist at financial data provider Markit, said the figures went "a long way to vindicate the European Central Bank`s decision to cut interest rates to re-stimulate growth across the single currency area".

Last week the ECB cut the headline interest rate to 0.25 percent from 0.5 percent in a shock move that was warmly welcomed in most eurozone capitals but was attacked by several German officials as unnecessary and undermining the strength of the single currency union.

Williamson said the underlying trend showed the region`s recovery "remained on track at the start of the fourth quarter, although the upturn continues to look both fragile and weak".

The October Markit survey of purchasing managers across the eurozone remained at a level consistent with just 0.2 percent quarterly GDP growth, "though most importantly it has signalled a marked turnaround in the region`s economic health compared to the start of the year".

The slow recovery means the eurozone is still 3percent smaller than its pre-crisis peak. Only Germany among the larger states has exceeded its previous high, with GDP up 2.6 percent.

"The French economy remains 0.3 percent smaller, while Spain and Italy are also 7.4 percent and 9.1 percent smaller respectively. By comparison, the UK economy is still 2.5 percent smaller than is pre-crisis peak while the US is 5.3 percent larger. Japan has edged 0.1 percent up on its prior peak," he said.

Source: theguardian
BDST: 1728 HRS, NOV 15, 2013
SR/JCK