Common Currency Recession: Euro-Zone Woes Fuel Immigration to Germany
Economic news from the euro zone continues to worsen, as the European common currency area slipped into recession in the third quarter. Even the German economy is stagnating, but immigration from crisis ridden countries in southern Europe continues to spike nonetheless.
The oft-cited possibility of a double-dip recession in the euro zone has become reality. According to statistics released on Thursday by the EU statistical office Eurostat, gross domestic product in the 17 countries in the common currency area fell by 0.1 percent in the third quarter following a 0.2 percent drop in the second quarter. With two consecutive quarters of negative growth, the euro zone has entered its second recession since the global financial crisis of 2009.
The recession is hardly unexpected. The euro-zone economy has been weak for much of the past year, and indeed would have entered recession at the beginning of the year but for a first quarter 2012 result of 0.0 percent growth following a dip in the final quarter of 2011. Indeed, against the third quarter of 2011, the euro-zone economy has shrunk by 0.6 percent.
Despite the dismal economic news, France supplied an unexpected bright spot, posting growth of 0.2 percent in the third quarter and outpacing expectations of stagnation. The German economy likewise grew by 0.2 percent in the third quarter. Taken together, the economies of the 27 European member states grew by 0.1 percent.
No Improvements on the Horizon
Elsewhere, though, the news was decidedly less than positive. The Spanish economy shrank by 0.3 percent, Portugal posted a contraction of 0.8 percent and Italy fell back by 0.2 percent. The Greek economy contracted as well, though Eurostat only has data indicating the country's year-on-year mark, showing a plunge of 7.2 percent against the third quarter of 2011.
But even stronger economies in northern Europe showed signs of struggling, led by the Netherlands with its 1.1 percent drop in economic output against the second quarter.
Experts immediately began pointing their fingers at the euro zone's reliance on austerity measures as it struggles to emerge from the ongoing debt crisis. "We are now getting into a double-dip recession which is entirely self-made," Paul De Grauwe, an economist at the London School of Economics, told Reuters. "It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else."
The situation in the euro zone, say experts, is not likely to improve soon. The European Commission has forecast euro-zone shrinkage of 0.4 percent for the entire year and expects the economy to grow a paltry 0.1 percent next year. Many feel that, given signs that the fourth quarter could be weaker than expected, even those numbers might be too optimistic.
Furthermore, the German economy, which has bucked the trend of negative news in recent quarters, is showing signs of slowing. The 0.2 percent third quarter growth marks its weakest of the year and economists expect stagnation in the fourth quarter.
Climbing Immigration to Germany
The steepest increases in the first half of this year have come from euro-zone states. More than 15,700 people arrived from Greece in the first six months of 2012, a 78 percent increase over the first half of 2011. The 11,000 people who arrived from Spain mark a jump of 53 percent over the previous year. The influx from non-euro-zone country Hungary rose by 46 percent, partially due to tough economic conditions there.
Numerically, however, Poland remains on top of the list of origin countries. Some 89,000 people arrived from Germany's neighbor in the first half of the year.
cgh -- with wire reports
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