* Economists expect 0.2 pct contraction in third quarter
* French economy seen stagnating; Germany to grow just 0.2
By Robin Emmott
BRUSSELS, Nov 15 The euro zone likely slipped
into its second recession since 2009 in the July-September
period, as the three-year debt crisis slowed economic growth in
Germany to a crawl.
Economists expect EU statistics office Eurostat to say on
Thursday that the bloc's output shrank 0.2 percent in the third
quarter, as it did in the second quarter.
That would put the 9.4 trillion euro ($12 trillion) economy,
which generates a fifth of global output, officially in
recession, although Italy and Spain have been contracting for
months and Greece is suffering an outright depression.
"The distress in more vulnerable member states has
progressively started to affect the remainder of the (European)
Union," senior European Commission official Marco Buti said in a
report this month forecasting a 0.4 percent contraction for the
euro zone in all of 2012.
Hopes for a recovery next year are also fading, with the
European Commission saying the economy will flatline in 2013.
A rebound in the euro zone could be vital for the rest of
the world as the United States and China struggle with the
impact of the crisis on their companies' ability to grow and
Millions of workers went on strike across Europe on
Wednesday to protest the government spending cuts they say are
driving the region into a deeper malaise but which Germany and
the Commission say are crucial to healing the wounds of a
decade-long, credit-fueled boom.
Output from euro zone factories dropped the most in nearly 4
years in September and companies as diverse as telecoms group
Ericsson, Ford Motor, steel group Kloeckner and engineering firm
Bombardier have announced job cuts.
EU officials say the euro zone is on the right path as
labour costs fall and exports begin to rise. The European
Central Bank's promise to buy euro zone government bonds has
also drawn foreign investors back into sovereign debt markets.
But after months of resilience, Germany, Europe's largest
economy, is seeing its companies unnerved by the crisis and
demand for its goods in the euro zone and abroad is drying up.
While German gross domestic product expanded by 0.5 percent
in the first quarter, it slowed to 0.3 percent in the second and
economists polled by Reuters see growth weakening further to 0.2
percent in the July-September period.
Spain and Italy will also report GDP figures on Thursday,
but it is France, the euro zone's second-largest economy, that
many are watching to see if its economy stagnates or shrinks.
"France in particular is a cause for concern," said Deutsche
Bank in a report. "France's economy is in the doldrums, with
still poor growth prospects and weak export development," the
bank said, pointing to its declining share of world export
markets, unprofitable companies and low investment incentives.