World Bulletin / News Desk
Strong exports limited the euro zone's economic contraction in the second quarter of this year despite falling investment, inventories and private consumption that point to output shrinking overall in 2012.
The EU's statistics office Eurostat confirmed on Thursday that gross domestic product in the 17 countries using the euro fell 0.2 percent quarter-on-quarter. It revised the year-on-year fall to 0.5 percent from a previously reported 0.4 percent.
The debt crisis that began in Greece nearly three years ago has crushed Europe's efforts at recovery from the 2008/2009 global financial crisis, probably sending the bloc into recession for the second time in just three years.
"Weakness is the name of the game," said Joost Beaumont, a senior economist at ABN AMRO in Amsterdam. "We see another contraction in the third quarter because domestic demand will be hit by fiscal consolidation, rising unemployment, tight credit conditions and the high uncertainty of the euro zone crisis."
The euro zone would already be in a technical recession, were it not for flat output in the first three months of the year, after a 0.3 percent quarterly contraction in the last quarter of 2011.
Eurostat said a fall in household consumption subtracted 0.1 percentage point from the final quarterly GDP figure and shrinking investment and inventories took away 0.2 percentage points each, compared with the previous three months.
Strong exports, however, added 0.6 percentage point which, after the negative contribution of imports, left the net result from trade at a positive 0.2 percentage point.
With the Chinese economy slowing and the U.S. economy struggling to build a solid recovery, the euro zone cannot rely on exports to pull it out of the downturn, however.
"Leading indicators continue to point, in broad terms, to more of the same in the third quarter, though with a risk of the external sector softening in line with recent evidence of weakness in manufacturing activity globally," Ken Wattret, a euro zone economist at BNP Paribas, wrote in a note to clients.
Most economists see the euro zone, which generates 16 percent of global economic output, shrinking by at least 0.3 percent this year. A recovery may only come in mid-2013.
In its latest assessment, the Paris-based organisation for Economic Cooperation and Development said on Thursday that Europe's problems were also "dampening global confidence, weakening trade and employment and slowing economic growth".
NO SUPPORT FROM SHOPPERS
The euro zone's biggest hurdle is that Europeans' ability to spend and drive a recovery has been devastated by government lay offs, budget cuts, record joblessness and stubbornly high inflation pushed up by world oil prices.
Data showing a fall in retail sales in July and a contraction in the euro zone's service sector in August, both released on Wednesday, showed the extent of the weakness.
Recession is already a reality for much of southern Europe while Germany and France, the bloc's two largest economies, are starting to feel the malaise as Spaniards and Italians buy fewer of their products.
GDP contracted in Belgium and Finland and stagnated in France, as the problems of the indebted Mediterranean weigh.
"The core is no longer immune to the euro zone crisis," ABN AMRO's Beaumont said.
Retail sales fell sharply in Germany in July and confidence among European consumers fell to a 38-month low in August, which bodes poorly because just over half of the euro zone's economy is generated by domestic spending.
Led by France, EU leaders agreed at a summit in June to inject 120 billion euros ($151 billion) into the European economy to counterbalance public sector layoffs and cuts in spending to bring budget deficits down to sustainable levels.
The European Central Bank cut interest rates to a record low of 0.75 percent in July to cut the cost of borrowing for families and businesses, but neither the bank's move nor the EU's "growth pact" is likely to overcome the downturn.
Investors are instead focused on a policy meeting later on Thursday where the ECB is expected to outline new tactics to cut high borrowing costs for indebted Spain and Italy.
Russia's oil output stands at over 10 million barrels per day, the world's largest, but it needs new sources of crude oil, including hard-to-recover deposits and the Arctic, to sustain this level
The strike at Yue Yuen is not just one of China's biggest in recent years, it's also more clearly driven by workers' fears that they have been scammed by an opaque and convoluted welfare payment system.
When the system is in place citizens will be able to buy a limited amount of subsidised fuel, and will have to pay a normal, market price for any extra quantities.
Production in Upper Nile state's Paloch oilfields, where output has not been hampered by the conflict, stood at 159,000 barrels per day this week.
Dragomir Stoynev accused fellow European Union members of a politically-motivated attempt to scupper the project, and urged the bloc to understand the effect that doing so would have on its members.
The drops have come mainly because Japan did not take any cargoes in March and South Korea is not scheduled to take any shipments in April, according to the tanker data.
Japan's finance ministry and central bank have declined to comment on the payments.
But a survey shows that most people believe inflation is speeding up and could surpass 37 percent this year.
A fifth payment of $450 million was due on April 15, contingent on Iran having diluted half of its most sensitive stockpile of nuclear materials
The year-on-year inflation rate in the 18 countries sharing the euro was 0.5 percent in March against 0.7 percent in February, the European Union's statistics office Eurostat said.
Pushed by higher food and shelter costs, the consumer price index rose in March.
Country of origin labels are currently voluntary in the European Union and many of the bloc's governments want to keep it that way
While reverse flows would help cushion the effects of a Russian export cut during mild-demand summer months, analysts say they would not be sufficient in winter.
The tanker, Aegean Dignity, is due to take its load to Italy, the NOC quoted an oil official as saying in a statement on its website
TAP aims at enhancing the security of natural gas supply as well as diversification of gas supplies for the European markets.