Euro zone downturn worst since early 2009



REUTERS

Published — Friday 23 November 2012

Last update 23 November 2012 2:55 am

| نسخة PDF Print News | A A

LONDON: The euro zone economy is on course for its deepest downturn since early 2009, while Chinese factories returned to growth last month bringing better news for the world economy, business surveys showed.
The latest purchasing managers indexes (PMIs), which survey thousands of companies all over the world, at least suggested the global economic slowdown is not getting worse, despite the prolonged downturn in Europe.
The US index, released on Wednesday because of the Thanksgiving holiday, showed manufacturing growing at its quickest pace in five months.
China’s vast manufacturing sector, meanwhile, expanded for the first time in 13 months.
Still, Europe looks set to remain the major drag on the world economy next year. It re-entered recession in the third quarter, and this quarter seems unlikely to bring any respite.
While factory data in the euro zone also surpassed expectations, there was a worrying decline in its services sector, comprising the banks, hotels and restaurants that make up most of its economy.
PMI compiler Markit said the surveys were consistent with the euro zone economy shrinking 0.5 percent this quarter, which would be the worst reading since the first quarter of 2009, when the economy hit its lowest ebb during the financial crisis.
“Looking ahead, we still think ... the improvement in the global economy, as signaled by the further pickup in the Chinese PMI, will provide some respite to the euro zone economy,” said Martin van Vliet, economist from ING.
But that could be some way off.
“The weak PMI outturn for November is a major disappointment in light of the increases in the German and French PMI surveys, and suggest the recession on the euro zone’s periphery is gathering further pace.”
German business activity shrank for a seventh straight month in November, dragged down by services firms, while the French PMI signaled the risk of a sharp economic contraction taking place this quarter.
The euro zone’s periphery — countries such as Spain, Portugal and Greece — have labored under severe austerity policies that have deepened their recessions and sparked popular unrest.
A reminder that the euro zone’s sovereign debt crisis has further to run came on Wednesday, as international lenders failed for the second week to reach a deal for emergency aid for Greece.
Still, Spain managed to sell nearly 4 billion euros with ease at auction yesterday, kicking off its funding program for a daunting 2013.
Markit’s flash euro zone services PMI fell to 45.7 this month, its lowest reading since July 2009 and failing to meet the expectations of economists who thought it would hold at October’s 46.0.
It has been rooted below the 50 mark that divides growth and contraction for 10 months now, and survey compiler Markit said it was consistent with a 0.5 percent economic contraction this quarter.
To a large extent, global growth next year will depend on China’s ability to overcome its downturn, after a disappointing 2012.
World share markets extended a week-long rally on Thursday in response to the data.
Yesterday’s Chinese manufacturing PMI was a clear sign the pace of economic growth has revived after seven consecutive quarters of slowdown, after it hit 50.4 in November, a 13-month high and above October’s 49.5.
“This reflects that conditions for smaller firms, especially exporters, are looking up,” said Li Wei, a Shanghai-based economist for Standard Chartered. “The consensus in the market is already for a small, gradual improvement.”
An uptick in key economic activity indicators in October, following encouraging signs in September, cemented the view of many analysts and investors that a rebound in the world’s second largest economy gathered momentum as it entered the fourth quarter, thanks to a raft of pro-growth policies rolled out by the government over recent months.

What's happening around Saudi Arabia

RIYADH: Three citizens, aged above 65, and a 32-year-old expatriate have died of Middle East Respiratory Syndrome (MERS) in Riyadh raising the death toll to 471 in Saudi Arabia since June 2012, the Ministry of Health said on Tuesday.It also reported...
JEDDAH: Five hospitals and health centers across the Kingdom have been ranked among the 10 top hospitals in the Arab World, according to the Webometrics Ranking of World Hospitals 2015 conducted by Cybermetrics Lab. King Faisal Specialist Hospital an...
RIYADH: The children of the martyrs and wounded soldiers will be given preference for jobs in the organization, KACST President Prince Turki bin Saud Bin Mohammad Al-Saud said Riyadh on Tuesday.On an initiative from the Ministry of Education, a two-d...
JEDDAH: The laboratory of Al-Amal Complex for Mental Health was recently ranked fifth in the RIQAS program for biochemistry out of 120 laboratories. It also came in sixth in the same program for the department of hematology among the 60 participants,...
RIYADH: Anticipating high temperatures during the Haj season, the Ministry of Health has made arrangements to install more equipment to treat heatstroke patients among pilgrims, Health Ministry spokesman Khaled Al-Mirghalani said following a meeting...
RIYADH: The National Water Company (NWC) has added a new feather to its cap by launching an e-branch (website www.nwc.com.sa) to serve the customers around the clock.The NWC, which aims to become the leading water utility in the Gulf that comes under...
DAMMAM: Traffic regulations in the Kingdom and many countries of the world dedicate the right lane of highways and roads to trucks as they are designed to carry heavy weights in contrast to the other lanes, which are allocated for lighter weight vehi...
RIYADH: The solar-power plant, “Layla,” in Aflaj province, will be opened shortly, Saleh Al-Awaji, chairman of Saudi Electricity Company (SEC), has said.The Saudi Electricity Company (SEC) is one of the signatories, along with King Abdulaziz City for...
RIYADH: The expanded facility for machine readable passports (MRPs) at the Embassy of Pakistan will help the mission process over 1,200 applications on daily basis. The new setup was inaugurated on Tuesday.Saudi Arabia hosts the largest Pakistan comm...
RIYADH: The Saudi Standards, Metrology and Quality Organization (SASO) has directed manufacturers and their agents in the Kingdom to strictly follow the safety regulations for the new cars to be marketed to the Kingdom beginning 2017.In a statement r...
RIYADH: The Ministry of Social Affairs recently honored 20 academically gifted orphans whom it had earlier sent to Japan for ten days to visit attractions that include cultural and educational institutions. Ministry of Social Affairs Undersecretary D...
JEDDAH: Prince Bandar bin Abdullah, member of the board of trustees of King Abdullah bin Abdul Aziz International Foundation for Humanitarian Action, spoke at the World Scout Jamboree in Japan. He expressed his gratitude and appreciation for the invi...
JEDDAH: The Ministry of Health has issued a circular to all health sector employees to ensure they sterilize their hands prior to dealing with patients.The circular, issued by Deputy Minister for Public Health Dr. Abdul Aziz Abdullah bin Saeed, is in...
JEDDAH: The Indonesian Consulate and community have been conducting their 70th Independence Day celebrations for the past three months by having different cultural and social activities. On Tuesday, the consulate arranged a blood donation camp with t...
JEDDAH: The Specialized Penal Court in Jeddah on Tuesday issued a preliminary verdict on the imprisonment of two Saudi suspects to 38 years.The first suspect was charged with firing on the police center in Awamiyah, Qatif Province, while the other wa...

Stay Connected

Facebook