Europe in Recession

The Business Cycle Dating Committee of the Centre for Economic Policy Research (the European counterpart of the U.S. NBER) last week issued a declaration that Europe entered a new recession a year ago, dating the business cycle peak at 2011:Q3.

Euro area real GDP, 2009:Q1 -2012:Q2 (normalized by 2011:Q3 = 100). Source: CEPR

Interestingly, although Europe had been in the expansion phase over 2009:Q3-2011:Q4, real GDP still had not yet returned to its 2008:Q1 peak before the current recession began.

Euro area real GDP, 1995:Q1 -2012:Q2 (normalized by 2011:Q3 = 100). Source: CEPR

The CEPR announcement applies to Europe overall, and there are important differences across countries. Output has been falling in Italy and Spain but is still growing in Germany.

Real GDP for selected individual countries, 2010:Q2 -2012:Q2 (normalized by 2011:Q3 = 100). Source: CEPR

This marks the first recession in CEPR’s business cycle chronology going back to 1970 in which Europe went into recession without the United States also being in a downturn.

Let’s hope we’ll still be saying that at the end of 2013.

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