Eurozone recovery hits snag in third quarter

Associated Press
A homeless person sleeps in front shuttered shop due to crisis at the upscale Voukourestiou street in Athens on Wednesday, Nov. 13, 2013. Greece battles a sixth year of recession and high unemployment from austerity measures in exchange for ongoing rescue loans from International Monetary Fund and the other 16 European Union countries that use the euro. (Petros Giannakouris)

LONDON (AP) — The recovery from recession in the 17-country eurozone continued in the third-quarter of the year — but only just.

Eurostat, the EU's statistics agency, said Thursday that the region, which only emerged from its longest-ever recession in the second quarter, posted meager economic growth of 0.1 percent during the July to September period compared with the previous three-month period. That was in line with market expectations but below the previous quarter's 0.3 percent rate.

The figures confirm that the eurozone faces headwinds that will make its recovery a long process that is prone to setbacks. Debt levels, despite years of government cutbacks and tax increases, remain high in a number of countries, unemployment across the region is at a record high, and consumers are hesitant to reach for their wallets or purses.

As a result, few economists think the recovery in the eurozone can pick up a head of steam and become self-sustaining in the way it has in the United States. In the third quarter, the U.S. grew at an annualized rate of 2.8 percent, compared with the eurozone's rate of about 0.4 percent.

The weak economic backdrop is one reason why the European Central Bank cut its main interest rate last week to a record-low 0.25 percent.

Thursday's figures show the recovery has slowed in the core economies, such as Germany and France, while showing mild improvements in some countries in the so-called periphery, notably in Spain, which saw its nearly two-year recession come to an end.

Germany's economic growth slowed to a quarterly rate of 0.3 percent from 0.7 percent in the previous three-month period as exports dragged. For an economy that relies heavily on its high-value exporters, such as big car manufacturers like BMW and Daimler, that's a sign of weak demand among its neighbors and possibly an indication that the recent high value of the euro has taken its toll.

In France, the situation was even more downbeat, with Europe's second-largest economy after Germany posting a quarterly contraction of 0.1 percent. It's not in recession, though, as it grew by 0.5 percent in the previous quarter — a recession is traditionally defined as two consecutive quarters of negative economic growth.