The eurozone is stuck in recession — its longest since the euro was founded in 1999. The latest figures from the European Union’s statistics office show that the economy of the 17 EU countries that use the euro shrank for a sixth straight quarter, slumping by 0.2 per cent in the January-March period from the previous three months.
Initially it was just the countries at the forefront of the eurozone’s debt crisis, such as Greece and Portugal, that were contracting. But the malaise is now spreading to the so-called core countries. Wednesday’s figures showed Germany, Europe’s largest economy, grew by a less-than-anticipated quarterly rate of 0.1 per cent while France entered its third recession since 2008.
Whatever problems the big economies are experiencing, they pale in comparison with the countries that have either been bailed out or are trying to avoid a financial rescue.
Here is a look at how they are doing:
The country has faced the most acute economic difficulties and it remains mired in a six-year recession that is commonly being referred to as a depression. The Greek economy has been ravaged by a series of austerity measures, such as wage and pension cuts and tax rises, demanded by international creditors in order to return the country’s public finances to health.
In the first quarter, the Greek economy was 5.3 per cent smaller than it was the year before — quarterly figures are not provided. However, that is an improvement compared with the past six months — in the third quarter of 2012, the annual rate of contraction stood at 6.7 per cent. The country’s creditors and the Greek government have recently voiced hopes that the calmer financial backdrop may herald a return to growth.
Much worse is projected for Cyprus, which recently accepted a bailout following a damaging crisis that saw its banks close for nearly a couple of weeks. Many economists fear that the small eastern Mediterranean island nation will see its output shrink at Greek-style levels over the coming couple of years as its economy readjusts. Capital controls remain in place, two months after the crisis that gripped the country.
In the first quarter, the island’s economy shrank by a quarterly rate of 1.3 per cent. The EU’s executive arm, the Commission, estimated in its Spring economic forecast that Cyprus’s economy will shrink by 8.7 per cent this year while its unemployment is set to hit 15.5 per cent.
Portugal remains in recession — even though the quarterly economic decline of 0.3 per cent in the first three months of the year is substantially smaller than the previous quarter’s 1.8 per cent drop.
The country, which received a 78 billion euro bailout in 2011, is showing signs of improvement — in spite of a new round of austerity measures recently announced. Last week, it raised 3 billion euros in long-term debt on international markets — a milestone in efforts to restore investor confidence in the frail eurozone country.
Spain has been in recession for most of the past four years and has a record 27.2 per cent unemployment rate. Its economy shrank by a quarterly rate of 0.5 per cent in the first three months of the year.
The country came dangerously close to needing a sovereign bailout last year as the country negotiated a 40 billion euro bailout for its stricken banking system. It has since introduced a raft of spending cuts, tax hikes and reforms.
Italy has also embarked on the austerity path to control its high debt levels, some 130 per cent of its gross domestic product. That debt ratio is set to get bigger as its economy contracts. Like Spain, Italy’s GDP shrank by a quarterly rate of 0.5 per cent in the first quarter.
Carlo Sangalli, President of Italy’s Confcommercio business lobby, called on the government to press ahead with measures to support domestic demand “and give the possibility for the real economy to recover and grow.”