Eurozone recession extends into 6th quarter

The Associated Press, Paris | Business | Wed, May 15 2013, 9:00 PM

The recession across the economy of the 17 European Union countries that use the euro extended into its sixth quarter — longer than the calamitous slump that hit the region in the financial crisis of 2008-9.

Eurostat, the EU's statistics office, said Wednesday that nine of the 17 eurozone countries are in recession, with France a notable addition to the list. Overall, the euro region's economy contracted 0.2 percent in the January-March period from the previous three months.

Though that's an improvement on the previous quarter's 0.6 percent decline, it's another unwelcome landmark for the single currency bloc as it grapples with a debt crisis which has forced governments to slash spending and raise taxes.

These austerity measures have inflicted severe economic pain and social unrest. Unemployment across the eurozone is currently at a record high of 12.1 percent — in some countries, such as Greece, it's as high as 27.2 percent.

Though this recession is not nearly as deep as the one in 2008-9, it is the longest in the history of the euro, which was launched in 1999. A recession is officially defined as two straight quarters of negative growth.

"The eurozone is facing a double blow from necessary restructuring of its domestic economy and somewhat disappointing growth in world trade, in particular demand from emerging markets," said Marie Diron, senior economic adviser to Ernst & Young.

There was also bad news for the wider 27-country EU, which includes non-euro members such as Britain and Poland. It too is now officially in recession after shrinking by a quarterly rate of 0.1 percent in the first quarter, following a 0.5 percent drop in the previous period.

With a population of more than half a billion people, the EU is the world's largest export market. If it remains stuck in reverse, order books for companies in the U.S. and Asia will be hit. Last month, U.S.-based Ford Motor Co. lost $462 million in Europe and called the outlook there "uncertain."