BERLIN/PARIS (Reuters) - Europe's two largest economies, Germany and France, both shrank markedly in the last three months of 2012, suggesting the euro zone has slipped deeper into recession.
The German economy contracted by 0.6 percent on the quarter, official data showed on Thursday, marking its worst performance since the global financial crisis was raging in 2009.
France's 0.3 percent fall was also a touch worse than expectations.
Worryingly for Berlin, it was export performance - the motor of its economy - that did most of the damage although economists expect it to bounce back quickly.
"In the final quarter of 2012 exports of goods declined significantly more than imports of goods," the German Statistics Office said in a statement.
The euro hit a session low against the dollar after the weaker than forecast German reading.
Back revisions to the French figures showed its output fell by 0.1 percent in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last twelve months.
While the European Central Bank's pledge to do whatever it takes to save the euro has taken the heat out of the bloc's debt crisis, even its stronger members are gripped by an economic malaise that could push debt-cutting drives off track.
French Prime Minister Jean-Marc Ayrault acknowledged for the first time on Wednesday that weak growth was putting his government's deficit goal for 2013 out of reach.
Figures for the whole euro zone are due at 1000 GMT and forecast to show a 0.4 percent fall on the quarter, pushing it deeper into recession.
Economists say it may also shrink in the first quarter of 2013 although more resilient Germany is expected to rebound.
"The chances that the (German) economy will return to growth at the beginning of this year are very good. The early indicators are all pointing upwards," said Andreas Rees, chief German economist at Unicredit.
"The question is how strong the first quarter will be. We expect growth of 0.3 percent but it could be more."
Dutch GDP dropped 0.2 percent over the quarter, keeping it in recession, while the Austrian economy shrank at the same rate.
WEAK PERIPHERY
For the more embattled members of the currency bloc, matters are of course worse.
Italy suffered its sixth successive quarterly fall in GDP -- this time by a sharp 0.9 percent -- putting it into a longer slump than it suffered in 2008/2009.
Its recession has been deepened by austerity measures that outgoing Prime Minister Mario Monti introduced to stave off a debt crisis.
With an election due on February 24/25, all sides in a three-way race between Monti's centrist bloc, Pier Luigi Bersani's center-left coalition and Silvio Berlusconi's center-right are pledging to cut taxes to try to kickstart economic growth.
Spain, the euro zone's fourth largest economy, released figures two weeks ago which showed it remained deep in recession after a 0.7 percent contraction in the fourth quarter.
Madrid is also pressing on with harsh austerity measures to cut its debt but may be given more time to meet its deficit targets by the European Commission if its economy worsens further.
There are signs that countries like Spain are starting to benefit from harsh internal devaluations - marked by wage falls and job losses aimed at making companies leaner and more productive.
The ECB predicts the euro zone will pick up later in the year although its currency, if it keeps strengthening, could quickly snuff out any of those hard-won competitive advantages for its high debt members.
More recent data for January have already suggested some upturn in the first months of 2013, in the bloc's stronger members at least, and if improvement comes it is likely to be seen in Germany first.
"The debt crisis has ebbed significantly and the global economy has turned up," said Joerg Kraemer at Commerzbank. "Therefore all the important early indicators for Germany are pointing upwards. I expect noticeable economic growth again in the first quarter."
The pain is not confined to Europe. Japan, under some pressure over its aggressive monetary and fiscal policies which are driving down the yen, came up with an unwanted riposte earlier on Thursday -- its GDP shrank 0.1 percent in the fourth quarter, leaving it in recession and crushing expectations of a modest return to growth.
(Additional reporting by Steve Schere, writing by Mike Peacock, editing by Chris Pizzey and Patrick Graham)
Source: http://news.yahoo.com/german-french-economies-contract-fourth-quarter-081306816--business.html
key largo arnold palmer invitational ryan madson louisiana primary syracuse basketball chipper jones chipper jones
B.C. Premier Christy Clark, left, and Finance Minister Mike de Jong, right, wait for Lt.-Gov. Judith Guichon to deliver the throne speech at the B.C. legislature. (Darryl Dyck/CP Images)
British Columbia Lt.-Gov. Judith Guichon delivers the throne speech at the B.C. legislature in Victoria, B.C., on Tuesday . (Darryl Dyck/CP Images)
British Columbia NDP Leader Adrian Dix is planning on introducing his own legislation this session as well. (Darryl Dyck/Canadian Press)
After a campaign that avoided climate change like the plague, President Barack Obama gave a State of the Union speech that put climate change on center stage. Early in the speech he encouraged law makers to revisit cap-and-trade as a way of tackling emissions of greenhouse gases.
