Eurozone contracts sharply end 2012, rebound mid-2013
(PARIS) - The eurozone's recession likely sharpened at the of last year but the single currency zone will begin to rebound in the second quarter of this year, forecasters at German, French and Italian agencies said Wednesday.
Ifo, INSEE and Istat said in a joint statement that "...business surveys as well as the decline of the industrial production in October suggest a further decrease of activity in" the fourth quarter of 2012 of 0.4 percent compared with the previous quarter.
The eurozone economy contracted by 0.1 percent in the third quarter after a 0.2 percent drop in the second quarter.
The three agencies had forecast a drop of only 0.1 percent in the fourth quarter of 2012 in their previous forecast in October.
They now expect the eurozone economy to stagnate with 0.0 percent growth in the first quarter of 2013 followed by a mild recovery of 0.2 percent in period from April through June.
The institutes expect the eurozone to benefit from an increase in external demand thanks to faster growth in emerging countries and the resolution of a fiscal standoff that should help the US economy to recover.
"The easing of tensions surrounding sovereign debts would support a stabilisation of investment over the forecast horizon," the forecasters said.
The eurozone economy would also be boosted by a "decrease of inflation and the mitigation of fiscal consolidation efforts," they added.