German And France Slowed Down

Two of Europe's biggest economies, namely Germany and France, in the last quarter of 2012 slowed economic growth. Contraction that occurred in the two countries shows that the euro zone economy has slipped into recession.


Gross Domestic Product (GDP) Germany contracted 0.6% in the fourth quarter of 2012 compared to the previous quarter were up 0.2%. While the French economy fell 0.3%, worse than market expectations wish there was recovery of the debt crisis.


Economic slowdown two countries made the market increasingly hesitant economic recovery in the first quarter of this year. Moreover, in addition to the two countries, the Italian economy during the same period also shrank 0.9%.


Eurozone weakened


German economic performance of the fourth quarter of 2012 to be the worst since the global financial crisis raged in 2009. Export demand continues to be the main cause of decline. "In the last quarter of 2012, exports of goods declined significantly over imported goods," said the German Statistics Office in its report.


Economists estimate, there are downside risks to economic growth in Germany in the first quarter of this year. Hopefully, the countries that have been the most resistant to the crisis be back up again in the next period.


"The possibility of the German economy will return to growth in the early years is very good, because all indicators pointing up. Question is how strong will grow," said Andreas Rees, chief German economist at Unicredit.


French Prime Minister Jean-Marc Ayrault, admitted that weak economic growth will make the deficit target this year seem ever more elusive. Statistical data showed French economic output fell 0.1% in the first and second year. That means France has entered a period of economic recession in the last twelve months.


The debt crisis that began in Greece in the past three years has forced all Eurozone countries cut spending to rein in budget deficits. The debt crisis has prompted at least five of the 17-nation euro zone fell into recession, including Italy and Spain.


Italy and Spain are the two countries with the third and fourth largest economies of Europe. In the fourth quarter of 2012, Spain's economy contracted 0.7%. The weakening of economic growth in some countries of Europe, make sure economists across Europe in the fourth quarter of 2012 shrank 0.4% from the previous quarter.


Mario Draghi, President of the European Central Bank (ECB), warned that the European economy is still not out of the crisis. It took until the second half of this year that economic recovery can take place.