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Eurozone output down by nearly one-fifth in the last year

Industrial output in the 16 countries of the eurozone area fell by 2.3% in February compared to the previous month. Overall, this meant that when February’s output was compared with a year earlier it had fallen by 18.4%.

 

There has been a general cutback in industrial output as the recession has worsened and demand fallen. However, the fall in February was particularly driven by a 4.3% fall in the production of durable goods such as cars, and a 3.0% fall in capital goods such as machinery.

Eurozone industrial output is crashing

Eurozone industrial output is crashing

 

The Organisation for Economic Co-operation and Development has forecast that the eurozone area will see a contraction in GDP of 4.1% this year and a fall of 0.3% next year. This largely equates with the view of the European Central Bank (ECB) although they expect a gradual recovery in 2010.

 

It was also announced yesterday that euro area annual inflation was at 0.6% in March, which was the lowest rate since the euro was introduced ten years ago. This marked a fall from a reading of 1.2% for inflation in February, and some commentators feel it will fall below zero in the coming months, bringing with it the possibility of a period of deflation.

 

The ECB which reduced its main interest rate to 1.25% in April, has flagged that it still has room to reduce rates further in May, in order to give a boost to the economy.

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Posted in Deflation, European Union, eurozone, Inflation, recession

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