January 14, 2012 / 3:40 PM / 6 years ago

Euro zone economy could contract by 1.5 pct/GDP - S&P

BRUSSELS, Jan 14 (Reuters) - The euro zone economy has a 40 percent chance of going into recession this year, with a contraction of up to 1.5 percent, ratings agency Standard & Poor's said on Saturday as it warned governments their policies were too focused on cutting debt.

"The risk of recession is rising and we are now forecasting a recession with a 40 percent probability for this year," S&P credit analyst Moritz Kraemer told a conference call.

"That could lead to a euro zone economic contraction of around 1.5 percent."

S&P downgraded the sovereign debt ratings of nine of the euro zone's 17 member states on Friday and said in the call with investors and reporters that it was disappointed the European Central Bank had not stepped up its purchases of the bloc's bonds in the secondary market to calm investors.

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