The eurozone slipped deeper than expected into recession in the final three months of last year.
GDP declined 0.6 percent – the most since early 2009 – as the region’s largest economies, Germany and France, shrank – by 0.6 and 0.3 percent respectively.
The next two biggest – Italy and Spain – also remained deep in recession with 0.9 and 0.7 percent contraction.
2012 was the first full year in which no quarter produced growth, based on figures for eurozone member countries going back to 1995.
But Commerzbank economist, Peter Dixon said we shouldn’t worry too much: “A negative figure for the fourth quarter in the eurozone. But as we go forward, I think the signs are, we’ll see some signs of stabilisation in the first half of 2013. I mean that’s not to say we’ll get big, positive, growth numbers. But something maybe flat, or maybe marginally negative in Q1 and hopefully something flat or maybe slightly positive in Q2.”
He bases that on a rise in factory orders and industrial production in December and some encouraging signs from business surveys in the early part of this year, with resilient Germany expected to rebound first.
The European Central Bank’s economists are also predicting the eurozone will pick up later in the year although that recovery could be threatened if the euro keeps strengthening.
But the grim eurozone GDP numbers spooked the foreign exchange markets, they were one of the factors that pushed the euro down against the dollar falling close to one percent during the trading day.