Eurozone in mild Q4 recession

The economies in the 17 nations sharing the euro contracted by 0.3 percent quarter-on-quarter in the final three months of 2011, the European Union's Statistics Office (Eurostat) reported on Tuesday, thus conforming earlier estimates released in February.

"The eurozone is currently going through a mild recession," the European Economic Affairs Commissioner Olli Rehn commented in a statement.

In the period under revision, households suffering from deep cuts in government expenditure and rising unemployment in much of the euro area reduced their spending by 0.4 percent, while imports into the eurozone dipped by 1.2 percent.

In a sign of weak business confidence, industries across the board decreased their output by two percent amid concerns about the credit crunch and customers not being able to pay their debts.

No homogeneous picture

There were, however, wide divergences between the performance of individual eurozone countries, with debt-stricken Greece and export-driven Germany appearing to be worlds apart.

Business confidence has meanwhile improved again, following the European Central Bank's second large-scale offering of three-year, ultra-cheap loans to struggling banks.

Also, a deal among most EU nations to commit to budget austerity has brought the interest rates on Italian and Spanish bond down to manageable levels again.

Still, the European Commission expects the eurozone to stay in recession throughout the current year, with the economy in the area forecast to contract by 0.3 percent. Germany and France are the only two eurozone countries which are likely to escape recession in 2012.

hg/mll (dpa, Reuters, AFP)