THE slump deepened across the eurozone in the final three months of 2012, official figures out yesterday show.
Eurozone GDP shrank by 0.6% in the fourth quarter, which was worse than forecast and the sharpest contraction since the beginning of 2009.
It marks the first time the region failed to grow in any quarter during a calendar year. In the first three months of 2012 the eurozone economy failed to grow, in the second quarter of the year it contracted by 0.2% and it shrank by 0.1% in the third quarter.
The eurostat figures followed news that the economies of Germany, France and Italy had all shrunk by more than expected, and saw the euro fall to a three-week low against the US dollar of $1.3320.
Hit by a sharp decline in exports, the eurozone’s biggest economy, Germany, saw the deepest contraction since the height of the financial crisis as its economy shrank by 0.6%.
The German statistics office said: ‘Comparatively weak foreign trade was the decisive factor for the decline in the economic performance at the end of the year: in the final quarter of 2012 exports of goods declined significantly more than imports of goods.’
The French economy shrank by 0.3% in the fourth quarter, while Italy showed 0.9% contraction for the period.
French Finance Minister Pierre Moscovici admitted on French radio that the government may need to rethink its growth forecast of 0.8% for 2013.
He said: ‘We note that the figure for 2012 is not good, around zero, and so we also know that growth for 2013 will have to be re-thought.’
The gloomy European figures came a day after European Commission President Jose Manuel Barroso announced formal talks will begin on a ‘ground-breaking’ EU-US free-trade agreement, following President Barack Obama’s State of the Union address.
Obama told Congress a free-trade deal would ‘boost American exports, support American jobs and level the playing field in the growing markets of Asia’.
EU-US trade is currently estimated at around 455bn euros ($613bn) a year.
The US trade representative, Ron Kirk, said: ‘For us, everything is on the table, across all sectors, including across the agricultural sector, whether it is GMOs (genetically modified organisms) or other issues (such as agricultural subsidies).’