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| Euro Zone Economy Shrinks; Recession Returns in France | Euro Zone Economy Shrinks; Recession Returns in France |
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| PARIS — Europe is slipping further into recession. | PARIS — Europe is slipping further into recession. |
| The euro zone economy shrank more than expected in the first three months of 2013, official data showed Wednesday, as France returned to recession for the first time since 2009 and Germany barely edged forward. | The euro zone economy shrank more than expected in the first three months of 2013, official data showed Wednesday, as France returned to recession for the first time since 2009 and Germany barely edged forward. |
| It marked the longest recession for the euro countries since the currency was introduced in 1999. | It marked the longest recession for the euro countries since the currency was introduced in 1999. |
| The 17-nation euro zone contracted by 0.2 percent in the first quarter from the last three months of 2012, Eurostat, the statistical agency of the European Union, reported from Luxembourg. That was less than the 0.6 percent decline recorded in the fourth quarter, but more than economists’ expectations of a 0.1 percent fall. | The 17-nation euro zone contracted by 0.2 percent in the first quarter from the last three months of 2012, Eurostat, the statistical agency of the European Union, reported from Luxembourg. That was less than the 0.6 percent decline recorded in the fourth quarter, but more than economists’ expectations of a 0.1 percent fall. |
| The economy of the overall European Union, made up of 27 nations, shrank by 0.1 percent. | The economy of the overall European Union, made up of 27 nations, shrank by 0.1 percent. |
| Germany, with the largest economy in Europe, was almost stagnant in the first quarter, managing growth of just 0.1 percent from the prior three months, when it shrank by 0.7 percent, the Federal Statistics Office reported in Wiesbaden. | Germany, with the largest economy in Europe, was almost stagnant in the first quarter, managing growth of just 0.1 percent from the prior three months, when it shrank by 0.7 percent, the Federal Statistics Office reported in Wiesbaden. |
| France, the second-largest economy in Europe, contracted for a second consecutive quarter, meeting the common definition of a recession. The economy shrank by 0.2 percent, the same decline as in the fourth quarter of 2012. | France, the second-largest economy in Europe, contracted for a second consecutive quarter, meeting the common definition of a recession. The economy shrank by 0.2 percent, the same decline as in the fourth quarter of 2012. |
| French President François Hollande, at a news conference in Brussels after a visit with José Manuel Barroso, the president of the European Commission, suggested that the euro zone recession was primarily the result of belt-tightening policies advocated by northern European nations like Germany, Finland and the Netherlands. | French President François Hollande, at a news conference in Brussels after a visit with José Manuel Barroso, the president of the European Commission, suggested that the euro zone recession was primarily the result of belt-tightening policies advocated by northern European nations like Germany, Finland and the Netherlands. |
| France’s dip back into a contraction “has to be regarded as what has happened in the past, not what is going to happen in the future,” he said. “My view is that we’ve got past the most difficult moment. Now if Europe, member states and France organize ourselves to promote growth, then we can return to the hope of a better future,” he said. | France’s dip back into a contraction “has to be regarded as what has happened in the past, not what is going to happen in the future,” he said. “My view is that we’ve got past the most difficult moment. Now if Europe, member states and France organize ourselves to promote growth, then we can return to the hope of a better future,” he said. |
| Mr. Barroso acknowledged that “we have to do more” to stimulate growth in Europe and that efforts announced last year had been sluggish. “We have to inject more urgency into these measures,” he said. | Mr. Barroso acknowledged that “we have to do more” to stimulate growth in Europe and that efforts announced last year had been sluggish. “We have to inject more urgency into these measures,” he said. |
| Among the “peripheral” euro nations, Spain’s economy shrank by 0.5 percent, the same as Italy’s, Wednesday’s data showed. Portugal shrank by 0.3 percent, and Cyprus’s economy, the victim of a financial sector meltdown and bailout, shrank 1.3 percent. Data on Greece were not immediately available. | Among the “peripheral” euro nations, Spain’s economy shrank by 0.5 percent, the same as Italy’s, Wednesday’s data showed. Portugal shrank by 0.3 percent, and Cyprus’s economy, the victim of a financial sector meltdown and bailout, shrank 1.3 percent. Data on Greece were not immediately available. |
| More than five years after the meltdown of the U.S. housing market set off the global financial crisis, the 27-nation European Union remains in turmoil, buffeted by a lack of confidence in member states’ public finances and demands for budgetary rigor to address those concerns. Unemployment in the euro zone reached a record 12.1 percent in March, and economists do not expect the labor market to turn around before next year, at the earliest. | More than five years after the meltdown of the U.S. housing market set off the global financial crisis, the 27-nation European Union remains in turmoil, buffeted by a lack of confidence in member states’ public finances and demands for budgetary rigor to address those concerns. Unemployment in the euro zone reached a record 12.1 percent in March, and economists do not expect the labor market to turn around before next year, at the earliest. |
| Despite its troubles, the E.U. market remains the world’s largest, and its weakness is doubly worrying at a time when the rest of the world is not growing strongly enough to take up the slack. Moody’s Investors Service warned Wednesday that the weakness in the euro zone, combined with the mandatory “sequestration” budget cuts in the United States, would weigh on the world economy, with growth in the Group of 20 nations this year of just 1.2 percent, picking up to 1.9 percent in 2014. | Despite its troubles, the E.U. market remains the world’s largest, and its weakness is doubly worrying at a time when the rest of the world is not growing strongly enough to take up the slack. Moody’s Investors Service warned Wednesday that the weakness in the euro zone, combined with the mandatory “sequestration” budget cuts in the United States, would weigh on the world economy, with growth in the Group of 20 nations this year of just 1.2 percent, picking up to 1.9 percent in 2014. |
| In annualized terms, the euro zone economy contracted by about 0.8 percent in the first quarter, lagging far behind the 2.5 percent growth in the United States. | In annualized terms, the euro zone economy contracted by about 0.8 percent in the first quarter, lagging far behind the 2.5 percent growth in the United States. |
| Japan, which reports its first-quarter G.D.P. figure on Thursday, is expected to post an annualized figure of about 2.8 percent. China in April reported 7.7 percent first-quarter growth. | Japan, which reports its first-quarter G.D.P. figure on Thursday, is expected to post an annualized figure of about 2.8 percent. China in April reported 7.7 percent first-quarter growth. |
| That Germany grew at all was a result of increased household consumption, Germany’s statistics agency said, as exports and investment declined. Jörg Krämer, chief economist at Commerzbank in Frankfurt, estimated in a research note that the unusually cold weather had subtracted as much as 0.2 percentage point from German growth. | That Germany grew at all was a result of increased household consumption, Germany’s statistics agency said, as exports and investment declined. Jörg Krämer, chief economist at Commerzbank in Frankfurt, estimated in a research note that the unusually cold weather had subtracted as much as 0.2 percentage point from German growth. |
| Even though Germany eked out a positive figure, it was “really in contractionary territory” in the quarter, Philippe d’Arvisenet, global head of economic research at BNP Paribas, said. He said more recent data showed clear evidence of a German rebound in the second quarter. | Even though Germany eked out a positive figure, it was “really in contractionary territory” in the quarter, Philippe d’Arvisenet, global head of economic research at BNP Paribas, said. He said more recent data showed clear evidence of a German rebound in the second quarter. |
| Mr. d’Arvisenet estimated that the euro zone economy would shrink this year by about 0.5 percent, following a 0.6 percent contraction in 2012. Growth is likely to return in 2014, he said, “but probably below 1.0 percent.” | Mr. d’Arvisenet estimated that the euro zone economy would shrink this year by about 0.5 percent, following a 0.6 percent contraction in 2012. Growth is likely to return in 2014, he said, “but probably below 1.0 percent.” |
James Kanter contributed reporting from Brussels. |