EUROZONE Officially In Recession 19. November 2008

The Eurozone has officially slipped into recession after EU Figures showed that the Economy shrank by 0.2 on the third quarter. This follows a 0.2 contraction in the 15 nation area in the previous quarter from April to June.
Two quarters of "negative growth" defines a technical recession.

This news follows data showing that Germany & Italy , two of the Eurozone economies, are already in recession. This is the first recession that the region has seen since the Euro's creation in 1999. It is believed that there will be further quarters of negative GDP growth until the third quarter of 2009, because so far they have not had the figures giving the full impact of the credit market crises. There is also a feeling that the full impact of unemployment on consumer spending, resulting in a further forecast that the Eurozone region will shrink by 1% next year. Sharp decline in Germany 's exports, 0.5 in the third quarter and 0.4% in the second quarter has hurt them. The Italian and Spanish Spanish economies also shrank in the third quarter. For Spain this is the first such drop since 1993. Much to the surprise of analysis's France 's economy went against the trend and expanded in the third quarter. Official data showed that the French Economy grew by 0.12% from June to Sept.

In November the European Central Bank lowered its interest rate by 3.2% to try and kick-start the Eurozones economy and more cuts are now expected as it is becoming clear the inflation risks are now retreating.
Eurostat statistics said that annual inflation had come down to 3.2% in Oct from 3.6% in Sept, helped by the decrease in the cost of oil. Some analysis predicts that this "could" go to as low as 2%, as it was when the Eurozone was formed in 1999. Meanwhile the Wider European Union made up of 27 countries is in danger of slipping into recession with output falling by 0.2 in the third quarter, after a flat period over the previous 3 months.
According to the British Chamber of Commerce, the UK will be in a "painful and prolonged period of recession" The British Economy shrank for the first time in 16 years, between July & September. Last week the Bank of England said that that the UK probably entered a period of recession in the middle of 2008 and it probably will go on till the middle of 2009.

Central Bankers Forum, Frankfurt
At the Central Bankers Forum in Frankfurt Mr. Bernanke (US Federal Reserve Chief) said that the world's central banks are ready to take further action to ease the troubled credit markets, but he warned that the financial markets remained under " severs strain "He did , however, note that there were "tentative improvements" in credit markets but that "monetary policy actions have not resolved the ongoing strains in financial markets" “. Policymakers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant.

G20 Summit Pledges to "restore" Growth
World leaders at the summit pledged to restore global growth. They said that they were determined to work together to achieve "needed reforms to the worlds financial systems"
German Chancellor Angela Merkel said that the stalled Doha round of global trade talks should be pushed forwards, so that basic agreement can be reached before President Bush leaves in January 2009
Key issues agreed were:
· Reform of international Financial Institutions, such as the World Bank and the IMF
· Global Free Trade deal
· Improvements to financial market transparency and ensuring complete and accurate disclosure by firms of their financial conditions
· Making sure banks and financial institutions incentives " prevent excessive risk taking "
· Asking finance ministers to draw -up a list of financial institutions whose collapse would endanger the global economic system
· Strengthen countries' financial regulatory regimes
· Taking a " fresh look " at rules that govern market manipulation and fraud .The leaders of the G20 agreed that they will meet again by April 30th, 2009 to review the progress,

The next summit will be in London with US President Obama attending.

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