Europe

Europe: The euro zone likely slipped into its second recession since 2009 in 3Q12, as the three-year debt crisis slowed economic growth in Germany to a crawl. Economists expect the bloc's output shrank 0.2% in 3Q12, as it did in 2Q12. That would put the €9.4 tr economy, which generates a fifth of global output, officially in recession, although Italy and Spain have been contracting for months and Greece is suffering an outright depression. A senior European Commission official observed, "the distress in more vulnerable member states has progressively started to affect the remainder of the EU". Hopes for a recovery next year are also fading, with the EC saying the economy will flatline in 2013. Millions of workers went on strike across Europe on Wednesday to protest the govt spending cuts they say are driving the region into a deeper malaise but which Germany and the Commission say are crucial to healing the wounds of a decade-long, credit-fueled boom. Output from euro zone factories dropped the most in nearly 4 years in Sep and companies as diverse as telecoms group Ericsson, Ford Motor, steel group Kloeckner and engineering firm Bombardier have announced job cuts. After months of resilience, Germany, Europe's largest economy, is seeing its companies unnerved by the crisis and demand for its goods in the euro zone and abroad is drying up. While German GDP expanded by 0.5% in 1Q12, it slowed to 0.3% in 2Q and economists see growth weakening further to 0.2% in 3Q. Spain and Italy will also report GDP figures on Thursday, but it is France, the euro zone's second-largest economy, that many are watching to see if its economy stagnates or shrinks.