Holland and Italy, two of the Eurozone’s largest economies, have gone into recession, new figures show.
The economies of both countries suffered a second successive quarter of shrinkage, each contracting by 0.7 per cent during the last three months of 2011.
Germany’s economy also contracted in the fourth quarter, down 0.2 per cent from the previous quarter. This was the country’s first shrinkage since 2009.
Together, all 17 nations making up the Eurozone witnessed a 0.3 per cent contraction in the fourth quarter, but have managed to avoid a collective recession with growth of 0.1 per cent in the third quarter.
However, Dr Howard Archer, chief UK and European Economist at IHS Global Insight, said he doubts that the Eurozone will be able to avoid further contraction in the face of tighter credit conditions, a further tightening in fiscal policy in many countries, the ongoing pressures facing consumers and limited global growth.
“We expect the Eurozone to start growing gradually again during the second half of 2012, assuming some easing in sovereign debt tensions, reduced inflation boosting consumer spending power, and a pick-up in global growth,” he said.
“Even so, we still see Eurozone GDP contracting by 0.6 per cent overall in 2012, held back significantly by extended contraction in Italy and Spain.”
Meanwhile, debt-stricken Greece suffered a seven per cent year-on-year contraction in its economy for the fourth quarter.
Public order minister Christos Papoutsis said today that the Greek people have been pushed to the limit by austerity measures.
The country had been ordered to make swingeing cuts in return for a €130 billion bailout.
But Eurozone ministers have demanded a further €325 million of cuts before the package will be considered.
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