euro zone recession
By Jonathan Cable

LONDON -- The eurozone has sunk back into its second recession since 2009, a Reuters poll predicted on Thursday, as the debt crisis that has ravaged the continent for over two years continues to stifle growth.

A deluge of downbeat data pushed economists to revise down their growth forecasts. And with no end to the debt crisis in sight the chances the European Central Bank will cut rates further from current record lows have increased.

The 17-nation bloc's economy contracted 0.3% last quarter and will shrink 0.1% in the current one, according to median forecasts in the poll of 34 economists taken this week, meeting the technical definition of recession.

"The environment is deteriorating," said Uwe Duerkop at Landesbank Berlin, who sees two quarters of contraction and a flat end to the year.

"The question is how long this recession will last -- we have a chance to come back to growth at the end of the year but if the political crisis stays as it is with no [concrete] decisions there is a risk the recession could be longer."

The debt crisis began in Greece over 2½ years ago and Athens is still hammering out almost 12 billion euros worth of austerity cuts demanded by the country's lenders after a deal proved elusive at an initial round of talks on Wednesday.

Cyprus became the fifth member country to seek financial assistance last month, following in the wake of Greece, Ireland, Portugal and Spain.

World Bank President Jim Yong Kim warned on Wednesday that most regions of the world will be hurt by the debt crisis enveloping the eurozone and said it could trigger a deep global recession.

Reuters polls published on Thursday saw forecasts chopped across the board. Global growth is now seen at 3.2% this year and 3.7% next. That is weaker than the 3.9% growth the International Monetary Fund forecast for next year.

Germany, home to Europe's largest economy and the engine behind the bloc's growth, was a standout, as economists upgraded growth predictions for 2012.

In neighboring France the government's 2013 1.2% growth forecast has been knocked firmly out of reach by the crisis, raising the risk Paris may abandon its target of cutting its deficit.

Zero Bound

The European Central Bank cut its main refinancing interest rates by 25 basis points to a record low of 0.75% this month and the deposit rate to zero.

Medians in the poll do not see the bank cutting further but almost half, 28 of 71, said it would chop another 25 basis points in the next two months.

Only 16 of 52 said they would cut in a July 5 poll.

"One would question whether it would make much difference, much more important would be their ability and willingness to grow their balance sheet, if we had an additional three-year LTRO that would help," said Mark Wall at Deutsche Bank.

The ECB flooded markets with more than 1 trillion euros ($1.23 trillion) of cheap loans in two three-year Long-Term Refinancing Operations. A poll of money market traders taken last month saw an increasing likelihood of another one.

Inflation, running at 2.4% in June, will ease in coming quarters the poll found and will fall below the ECB's 2.0% target ceiling early next year, giving it room to maneuver.

The struggling economy will contract 0.4% this year and grow just 0.6% in 2013. The forecast for this year has been unchanged in the last three polls but the 2013 forecast is revised down from 0.8%.

The IMF this week predicted a 0.3% contraction this year and 0.7% growth next.

Worryingly for policymakers, unemployment reached a new record of 11.1% in May and only around a third of the economists polled predicted it would fall below that rate before the end of next year.

Instead, it will climb higher in coming quarters, peaking at 11.5% in the first half of next year according to the highest median forecasts since polling began. ($1 = 0.8154 euros)


(Polling and analysis by Namrata Anchan and Ashrith Doddi; editing by Ron Askew)

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ksmwtm

Remove Personal SAVING Interest earnings & people have LESS to spend, so the FED lowers rates to To Big To Fail Banks? Insanity! My parents retired from teaching & the Post Office & earned double digit interest on CDs & spent what their pervious 'earnings' were because they had saved. How is YOUR bank treating you today? Can the FED! Taxation WITHOUT repersentation!

July 23 2012 at 11:20 AM Report abuse +1 rate up rate down Reply
donut999

Some of have noted this is a wake up call. More accurately, this is about the 4th one, call it a wake up scream. We will double dip, too, but it won't be quite as ugly as the first one. U.S. companies have gotten lean and mean over the last 4 years and have actually been able to make hay with reduced volumes, but expanded margins. Now, a double squeeze play is coming and they just cannot get any leaner or meaner. Never would have dreamed the S&P could go to 666 (devil number), but it did. Once it happened, no one sane can say it cannot happen again. Only play I am making is bank stocks with the least international exposure. If banks were Coke or Pepsi, their biz would consist of just coming in each morning, delivering product and collecting the money. No raw material or production cost. This is where banks are. Their product is money, and it is more or less "free" whether it is deposits they are paying zip on or at the fed window. The survivors will eventually be rolling in profits.

July 23 2012 at 8:11 AM Report abuse +1 rate up rate down Reply
rogerssparks

ONE WORLD GOVERMENT ONE WORLD CURRENCY,,,, IMF...... WAKE UP AMERICANS DO NOT GET COMPLACENT IT COMMING SOONER THAN YOU THINK BE CAREFUL BE VERY VERY CARFUL

July 23 2012 at 2:06 AM Report abuse +2 rate up rate down Reply
ggschk

this isn,t a Two Party,, right wing,, left wing,, problem. This is a Global problem, and people better wake up and start paying attention to what is really going on Globaly storm is coming dont get caught sleeping or dumbed down. better wake up

July 22 2012 at 8:47 PM Report abuse +3 rate up rate down Reply
2 replies to ggschk's comment
vondeck

You are right. That is the point I'm trying to make.

July 22 2012 at 8:56 PM Report abuse +1 rate up rate down Reply
depaul878

Isn't is a shame we now need to depend on Europe for what is happening in the U.S? Our 401K retirement plans rest on Spain, France, etc.? The only think I can say is good bye good old United States of America, it was real nice knowing you.

July 22 2012 at 10:01 PM Report abuse rate up rate down Reply
vondeck

The recession never ended in the United States. It's still here and getting worse. The liberal propaganda machine just isn't telling us. You can't hid the facts about the food and fuel prices. We better hope that global warming is real. This nation can't afford a colder than normal winter in the northern climates!!!

July 22 2012 at 8:42 PM Report abuse +2 rate up rate down Reply
vondeck

1 in 4 children in 2012 relies on food stamps to have enough to eat. Poverty is at its highest since 1959. Obama and the Feds policies are killing the nation. The more money we print the worst off we're going to be. Inflation at 3% without food and fuel. Who cares!! People have to eat and at least drive to work.

July 22 2012 at 8:33 PM Report abuse +1 rate up rate down Reply
2 replies to vondeck's comment
whackjobtwo

SOME ECONOMIST ARE SAYING THE ECONOMIC COLLAPSE OF 2008 IS WORSE THAN THE GREAT DEPRESSION. IF IT WAS UP TO THE REPUBLICANS THERE WOULD BE NO FOOD STAMPS AND MILLIONS WOULD DIE OF STARVATION. YEA,.......THAT SOUNDS LIKE SOMETHING THE DEVIL WOULD DO.

July 22 2012 at 8:47 PM Report abuse rate up rate down Reply
3 replies to whackjobtwo's comment
whackjobtwo

A REPUBLICANS ECONOMY, NO LIVING WAGES, NO UNIONS, NO PENSIONS, NO HEATH CARE, NO FOOD STAMPS, NO UNEMPLOYMENT BENEFITS, AND MORE TAX CUTS FOR THE RICH!

July 22 2012 at 8:53 PM Report abuse -2 rate up rate down Reply
2 replies to whackjobtwo's comment
alucky1128f8@aol

WhackjobEVAN, THE RICH ALREADY CARRY THE LAZY ON THERE BACKS. WHO DO YOU THINK BUYS ALL THIS STUFF FOR THE LAZY ? IF TAXES WENT UP , IT WOULD ONLY BE 85 BILLION A YEAR. HECK, OBAMA IS SPENDING 85 BILLION EVERY 8 DAYS !! WHY DON'T YOU HELP OUT AND GET A JOB !!

July 22 2012 at 9:23 PM Report abuse +1 rate up rate down
whackjobtwo

WHAT IS OBAMA SPENDING 85 BILLION EVERY 8 DAYS ON? EXPLAIN? IT TAKES CONGRESSES APPROVAL FOR OBAMA TO SPEND MONEY. SO THAT MEANS THE REPUBLICANS ARE LETTING OBAMA SPEND MONEY RIGHT? STOP SITTING ON YOUR BRAIN!!!!!!!

July 22 2012 at 10:00 PM Report abuse -2 rate up rate down
vondeck

Livestock which is pork and beef has risen 138% since 2009. With the United States printing Trillions of dollars since 2009 and the rest of the world following our lead food prices have soared since Obama took office. Wheat,Corn and Soybean prices have more than doubled since 2009. The commoditie prices is the real inflation. I live in the northeast gas is almost 4.00 a gallon,butter 3.00-4.00 per pound,hamburg 80% meat 3.00-4.00 per pound. Loaf of bread that isn't white 2.50- 4.00 a loaf. Nobody cares about ideology anymore. People wanted a change in 2008 and now the people want a change in 2012. I work hard and I want to eat good again.

July 22 2012 at 8:23 PM Report abuse +1 rate up rate down Reply
vondeck

Price of gasoline on Obama's first day of office Jan 20 2009 1.84 per gallon.

July 22 2012 at 7:44 PM Report abuse -1 rate up rate down Reply
1 reply to vondeck's comment
tmb55

that's because our economy tanked, it was 4 dollars a gallon just months before Bush left office, if you are going to cite facts, state them all.

July 22 2012 at 9:44 PM Report abuse +1 rate up rate down Reply
3 replies to tmb55's comment
n5monthsocrapleft

HEY MAYBE THE MUSLIM CLOWN CAN GIVE SOME OF HIS CAMPAIGN MONEY TO ALL AMERICANS SINCE HE KNOWS HE'S WAISTING ALL AMERICANS TIME N HAS NO CHANCE IN HELL IN WINNING ,CAUSE AMERICA IS HEADING FOR RECORD POVERTY SINCE 1959~~START THIS MUSLIM CLOWNS IMPEACHMENT TRIAL BEFORE THE WHOLE COUNTRY COLLAPSES IN DEPRESSION !

July 22 2012 at 3:22 PM Report abuse +1 rate up rate down Reply
2 replies to n5monthsocrapleft's comment
whackjobtwo

HEY MAYBE MITT MORMONBOT CAN GIVE SOME OF HIS MONEY THAT HE'S HIDING IN OFF SHORE ACCOUNTS TO ALL AMERICANS SINCE HE KNOWS HE'S WAISTING ALL AMERICANS TIME BECAUSE HE'S TO OUT OF TOUCH WITH MOST AMERICANS. MITT MORMONBOT IS A BILLIONAIRE.

THANKS BUSH AND THE REPUBLICANS ECONOMIC COLLAPSE OF 2008 MANY AMERICANS HAVE FALLEN INTO RECORD POVERTY. JUST THINK IF IT WASN'T FOR OBAMA THE POVERTY LEVEL WOULD BE MUCH WORSE. THE REPUBLICANS WOULD'VE CUT FOOD STAMP PROGRAM WHICH WOULD LEAVE PEOPLE STARVING TO DEATH! THE REPUBLICANS WOULD'VE CUT UMEMPLOYMENT EXTENSIONS LEAVING PEOPLE TO BECOME HOMELESS.

HEY BIRTHER CLOWN,........GO BRUSH YOUR TOOTH.

July 22 2012 at 8:01 PM Report abuse +3 rate up rate down Reply
3 replies to whackjobtwo's comment
whackjobtwo

HEY BIRTHER CLOWN..........OR........WHACKJOB, WHAT ARE YOUR GROUNDS FOR IMPEACHMENT?

July 22 2012 at 8:17 PM Report abuse rate up rate down Reply
2 replies to whackjobtwo's comment
alucky1128f8@aol

OBAMA HAS TOLD MANY LIES AND BROKEN MANY PROMISE TO THE AMERICAN PEOPLE !! HE'S OUT, 1-20-13 !!

July 22 2012 at 9:31 PM Report abuse rate up rate down
Setanta

let's begin WITH ELIGIBILITY.
and then pelosi GOES TOO.
signing off on a fraud.........

July 23 2012 at 12:28 AM Report abuse -1 rate up rate down
ggschk

Does micro chipping everyone ring a bell , does a one world currency ring a bell,,,,,
or a one world goverment ring a bell,or one world religion ring a bell,,,,,

July 22 2012 at 2:54 PM Report abuse +5 rate up rate down Reply
1 reply to ggschk's comment
Setanta

he heeeeeeeeeeee and NOW thr gubmint and their minions are ATTEMPTING to have the monopoly on weapons
and we ALL know how that works out.

July 23 2012 at 12:30 AM Report abuse +1 rate up rate down Reply