Eurozone growth revised down to 1.4% in 2011
Olli Rehn - Photo EC
(BRUSSELS) - The eurozone economy slowed at the end of last year and is now in a "mild recession", EU officials said on Tuesday in a blow to stock markets already falling on Greek debt worries.
The latest data and comment from the European Union point to a so-called double-dip recession within three years for the 17-nation eurozone, still struggling to overcome the debt crisis which has badly hit confidence.
European stocks fell by about 3.0 percent at bourses in France and Germany, and the euro was weak, despite a strong performances in bond issues by Greece and the European Union rescue fund.
European stocks had begun on a weak note because of uncertainty about the outcome of a Greek bond swap and debt writedown, a condition for a rescue of 130 billion euros ($170 billion) to save Greece from a disastrous default.
According to the EU statistics office Eurostat, the eurozone economy grew by 1.4 percent last year, less than the previously estimated 1.5-percent growth, and an expansion of 1.9 percent in 2010.
The office confirmed an estimate that output shrank by 0.3 percent in the fourth quarter and revised down growth for the third quarter from 0.2 percent to 0.1 percent.
The figures track a slowdown at least from the middle of last year, and on Tuesday the EU's Economic Affairs Commissioner Olli Rehn said in Paris: "The euro area is currently in a mild recession."
Recession is taken to mean two quarters running of declining output, so his remark points to a first-quarter 2012 figure which is likely to show that the economy shrank again.
The fourth-quarter growth of 0.1 percent was sharply down over 12 months from growth of 0.7 percent in the last quarter of 2010 in the eurozone.
Rehn's remark means that the eurozone is in its second period of recession in three years.
Over the whole of 2011 in the 27-nation European Union, gross domestic product expanded by 1.5 percent compared with 2.0 percent in 2010.
In comparison, US GDP rose 0.7 percent in the fourth quarter and 1.7 percent overall in 2011. In Japan, GDP fell 0.6 percent in the fourth quarter and 0.9 percent overall in 2011.
The data showed poor performance in the last 2011 quarter for the various components of GDP, with household consumption declining 0.4 percent in the euro area and 0.2 percent across the EU compared with increases of 0.3 percent and 0.2 percent in the previous quarter.
Investment dropped 0.7 percent in both areas while imports fell 1.2 percent and exports dropped 0.4 percent.
Among the countries where data was available, only three of the 17 sharing the euro saw growth in the last 2011 quarter -- Slovakia with 0.9 percent, France with 0.2 percent and Finland at 0.1 percent.
The sharpest falls were registered by Portugal with a 1.3 percent drop, Estonia with a decrease of 0.8 percent and Italy and the Netherlands, both with declines of 0.7 percent.
German GDP fell 0.2 percent along with Belgium's, while Spain registered a 0.3 percent slide.