Region avoids technical slump ‘by skin of teeth’
The eurozone has avoided technical recession by the “skin of its teeth”, according to Howard Archer, the chief UK and European economist for IHS Global Insight.
The second estimate from Eurostat, the European Union’s (EU) statistical agency, shows GDP growth was 0% in the first quarter.
Archer says that while a technical recession has been avoided, recessionary tendencies are emerging. (article continues below)
“Eurostat confirmed that the eurozone escaped technically moving into recession by the skin of its teeth as GDP was flat quarter-on-quarter in the first quarter of 2012, after contracting 0.3% quarter-on-quarter in the fourth quarter of 2011,” he says.
“However, this does not mask the fact that the eurozone is exhibiting recessionary tendencies in most respects, Indeed, eurozone GDP was down 0.1% year-on-year in the first quarter.”
Archer says the eurozone could return to growth by next year, predicting 0.7% GDP growth in 2013. However, such a forecast is dependent on “significant easing of the concerns and uncertainties surrounding Greece and Spain”.
Radu Vranceanu, a professor of economics at the ESSEC Business School, takes the view that Europe’s problems will escalate for as long as it is pushed towards greater integration.
He says: “Many ’experts’ argue that the only way out of this messy situation is to push integration further, why not, toward a European federation with a central government. In total disagreement with them, I argue that what we need now is ordered disintegration, with an EU focused on the goal of free trade, and a renewed respect of diversity and freedom.”
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