Even though the two biggest economies in the eurozone managed to grow in Q3, that wasn’t enough to save the eurozone from falling back into recession–for the second time since 2009.
Although France and Germany each recorded growth of 0.2% for the quarter, other economies within the currency bloc shrank by more than enough to offset them, sending the region’s 9.4 trillion euro ($12 trillion) economy downward for the second quarter in a row.
Reuters reported Thursday that Eurostat, the European Union’s statistics office, said overall economic output in the eurozone shrank by 0.1% in Q3, after a Q2 shrinkage of 0.2%. While the Q3 drop is smaller than Q2’s, it was still enough to put the region back into its second recession in the past few years.
Italy, Spain and the Netherlands all saw their economies shrink, while Greece has entered a full-scale depression. Even Belgium saw its economy stagnate. And many blame unrelenting insistence on tough austerity policies for the depressing news.
“We are now getting into a double dip recession which is entirely self-made,” said Paul De Grauwe in the report. De Grauwe, an economist with the London School of Economics, added, “It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else.”
While the European Commission begs to differ, saying that labor costs are dropping and exports increasing for Greece, Ireland, Portugal and Spain, and insisting that austerity is the only way to cut those countries’ budget deficits, it has also said that overall the eurozone’s economy will shrink by 0.4% for the whole of 2012–and it’s not very optimistic about the possibility of a recovery next year, either, saying that the region’s economy will grow by only 0.1%.