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Euro zone's largest economies stagnating

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Euro zone's largest economies stagnating

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German says strong industrial output helped its economy grow in the third quarter but the region’s debt crisis will dampen through the end of this year and into the early part of 2012.

The economy ministry said new orders, particularly of larger investment goods, are already declining, which is hitting output. The construction sector also recorded weaker demand.

The Bank of France has estimated GDP expansion of just 0.1 percent in the third quarter and believes there will be no growth in October, November and December.

The forecast is the central bank’s first for that period. It was made in its monthly business climate report, which highlighted further weakness in the services and industrial sectors in October in the euro zone’s second largest economy.

Slowing growth has forced the Paris government to announce a new round of tax hikes and budget cuts worth 65 billion euros over five years so that its deficit-reduction targets remain within reach.