Wednesday’s economic growth numbers make it official: the Euro zone is in its longest recession since records began in 1995. The 17-nation economy shrank by 0.2% between January and March, compared with last quarter's decline of 0.6%, deepening the bloc's recession as economic output fell for the sixth consecutive quarter.
Data released by the EU showed nine nations were in recession, each suffering at least a successive two-quarter drop in growth. France joined Greece and Spain in that unfortunate list, as unemployment reached a recent 16 year high with its GDP contracting 0.2%, the same percentage last quarter.
Italy's economy, the Euro zone's third largest, dropped 0.5%, though experts had forecast a 0.3% decrease, which means its GDP shrank 2.3% in about a year, according to the National Statistics Institute. The ranks of its jobless, already at about 11%, may swell to 12.3% in 2014.
Austerity-racked Greece suffered significant loss with its economy contracting by 5.3%. The Finance Ministry has said the economy will rebound in 2014, but only after a possible 4.3% decrease in 2013. On Tuesday, Fitch Ratings gave Greece's long-term credit rating a B minus — an improvement — saying it was no longer at risk of default.
Germany, which creates nearly one third of the Euro zone’s economy, showed a sight increase, recording 0.1% growth.
For the European Union, which consists of 27 nations, economic output was down by 0.1%, compared to its 0.5% contraction for the fourth quarter of 2012. According to Eurostat the Euro zone GDP has shrunk for six consecutive quarters.
News of the fall into recession came on the first anniversary of President Francois Hollande's swearing in. During the last twelve months Hollande has had to deal with mounting economic problems. France's economy hasn't grown significantly in nearly two years and European data show it was last in recession at the beginning of 2012.
We are in Europe, the Euro zone countries are our main clients and our main suppliers, and when the environment around us is depressed, well, that's the main factor in the slowing of the French economy, Pierre Moscovici told reporters after Wednesday's Cabinet meeting.
Despite the grim news, Moscovici said the French government is maintaining its projection that the economy will grow 0.1% this year and that it will manage to begin to bring down unemployment (10.6%) by the end of the year.