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Thursday, February 14, 2013

Eurozone recession deepens as Germany falters





The decline was bigger than the 0.4 percent drop expected in markets and the steepest fall since 2009, when the global economy was in its deepest recession since World War II.

The worry for European policymakers is that output is declining not just in the weaker, debt-laden economies such as Greece and Spain, where governments have been aggressively increasing taxes and cutting spending in order to get a grip on their public finances and relieve the pressure inflicted on them by skeptical investors.

The French government has to keep a tight leash on its finances, unemployment is around 10 percent and its exporters are struggling, not least in the auto sector, with both Peugeot-Citroen and Renault struggling.

"Unfortunately, their positive impact on competitiveness, employment and activity will take time to materialize and will do little to mitigate economic pain in the short term," said Herve Goulletquer, an analyst at Credit Agricole CIB.

Alongside the debt-reduction efforts that governments are pursuing across the eurozone, the region's exporters are also having to contend with a currency that has been rallying on foreign exchange markets, potentially making their products less competitive in the international marketplace.


READ THE ORIGINAL POST AT www.sfgate.com