Europe’s economy contracted the most in at least 13 years in the fourth quarter, compounding pressure on the European Central Bank to reduce interest rates to the lowest ever next month.
Gross domestic product in the euro region declined 1.5 percent from the previous three months, the European Union’s statistics office in Luxembourg said today. That was more than the 1.3 percent economists expected and the most since euro-area GDP records began in 1995. From a year earlier, GDP fell 1.2 percent in the fourth quarter, the only full-year drop on record.
Europe recorded the biggest trade deficit in 2008 since the euro’s introduction 10 years ago as higher oil prices boosted energy costs and the global financial crisis curtailed exports.
The region’s trade deficit of 32.1 billion euros ($40.5 billion) compared with a surplus of 15.8 billion euros in 2007, the European Union’s statistics office in Luxembourg said today.
The spreading of the global recession is curbing demand for European products, adding to pressure on the economy, which shrank the most in 15 years in the fourth quarter. Volkswagen AG, Europe’s largest carmaker, said deliveries fell about 20 percent last month and that sales in the export markets of Brazil, Russia, India and China have been “particularly hit” by the credit freeze.
Exports to the U.S., the second-biggest buyer of euro area goods, fell 5 percent in the 11 months through November from a year earlier. Sales to the U.K., the main destination for the region’s products, dropped 3 percent. Detailed data are published with a one-month lag.
Sales to China rose 10 percent in the 11-month period, slower than the 15 percent pace recorded in the first half of the year. Exports to Russia grew 16 percent, compared with 20 percent in the first half.
“In past years, investments in China, India and the Middle East led to strong demand for European capital goods,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “That demand has collapsed” and “will continue in the next months if you look at the new orders.” Bloomberg
Gross domestic product in the euro region declined 1.5 percent from the previous three months, the European Union’s statistics office in Luxembourg said today. That was more than the 1.3 percent economists expected and the most since euro-area GDP records began in 1995. From a year earlier, GDP fell 1.2 percent in the fourth quarter, the only full-year drop on record.
Europe recorded the biggest trade deficit in 2008 since the euro’s introduction 10 years ago as higher oil prices boosted energy costs and the global financial crisis curtailed exports.
The region’s trade deficit of 32.1 billion euros ($40.5 billion) compared with a surplus of 15.8 billion euros in 2007, the European Union’s statistics office in Luxembourg said today.
The spreading of the global recession is curbing demand for European products, adding to pressure on the economy, which shrank the most in 15 years in the fourth quarter. Volkswagen AG, Europe’s largest carmaker, said deliveries fell about 20 percent last month and that sales in the export markets of Brazil, Russia, India and China have been “particularly hit” by the credit freeze.
Exports to the U.S., the second-biggest buyer of euro area goods, fell 5 percent in the 11 months through November from a year earlier. Sales to the U.K., the main destination for the region’s products, dropped 3 percent. Detailed data are published with a one-month lag.
Sales to China rose 10 percent in the 11-month period, slower than the 15 percent pace recorded in the first half of the year. Exports to Russia grew 16 percent, compared with 20 percent in the first half.
“In past years, investments in China, India and the Middle East led to strong demand for European capital goods,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “That demand has collapsed” and “will continue in the next months if you look at the new orders.” Bloomberg
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