Euro region’s recession seen longest in single currency era

FRANKFURT: Euro-area data this week may reveal economic scars of the sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation. Gross domestic product in the 17-nation economy fell 0.1% in the first three months of 2013, a sixth straight quarterly decline, according to the median of 39 economists’ forecasts in a Bloomberg News survey.

That would exceed the 15-month contraction in 2008-2009 during the financial crisis, and is the longest streak since the euro’s founding in 1999. The data to be released on May 15 follow a series of national GDP reports that day showing the legacy of the sentiment shock and austerity measures since the crisis began.

While a European Central Bank pledge to backstop the euro has eased financial-market tensions, economic confidence at a four month low and record unemployment highlight the risk that the slump will persist.

“We are at a very critical stage at the moment and there are indicators that uncertainty is on the rise again,” said Joerg Kraemer, chief economist at Commerzbank in Frankfurt.

“It is essential for the euro area to find the right mix between necessary austerity and measures to support economic growth as soon as possible.” Euro-zone finance ministers met in Brussels on Monday to discuss the economic situation in the region after the European Commission revised its forecast for 2013 down to a 0.4% contraction.

They are reviewing bailout programs in Cyprus and Spain, and may sign off on aid payments to Greece. The euro fell 0.2% on Monday to $1.2971 as of 6:41 p.m. in Frankfurt. European stocks declined from their highest level in almost five years. The Stoxx Europe 600 Index slid 0.2% to 304.46. The European Union’s statistics office in Luxembourg will release first-quarter euroarea GDP data at 11:00 am on May 15.