November 14, 2012 12:14 pm

Dismal economic data add to Europe’s woes

Dismal economic data on Wednesday underscored the depth of the eurozone crisis as thousands took to the streets across more than a dozen countries in the region in protest over painful austerity measures.

Greece’s recession deepened in the third quarter as gross domestic product fell a worrying 7.3 per cent from a year earlier, accelerating from the 6.3 per cent decline in the April-June period, the country’s statistics office said.

Portugal’s economy also shrank, contracting for an eighth successive quarter, though the 0.8 per cent decline, following a 1.1 per cent fall in the second quarter, was much smaller than that of Greece.

The rest of the region was not spared from gloomy data, as eurozone industrial production showed its steepest fall in more than three years in September, declining 2.5 per cent from August.

The harsh reality of record levels of unemployment and the prospect of further austerity measures have taken their toll on citizens across the eurozone, thousands of whom took to the streets from Lisbon to Athens in general strikes that caused severe disruption.

While there were no large protests in Germany, which until now has been relatively resilient amid the crisis, Europe’s largest economy is starting to falter. Mario Draghi, president of the European Central Bank, said in a speech last week that the region’s woes were “starting to affect the German economy”.

Much of the focus this week has been on Greece, where international lenders were given more time to resolve their differences over Greece’s €174bn bailout and Athens successfully raised €4.06bn in short-term debt that should allow it to redeem bills due this Friday.

Christine Lagarde, managing director of the International Monetary Fund, on a trip to Malaysia told reporters that all parties shared the same objective of returning Greece to economic stability to regain access to the markets “as soon as possible”.

"Obviously from the IMF's perspective, we expect a real fix, not a quick fix, and that means clearly debt that is sustainable as quickly as possible," she said.

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