- Howard Archer, an economist at IHS Global Insight
The 17-nation economy has slumped into its longest recession ever, as the economic activity in the region fell for a sixth quarter in a row. Gross domestic product in the Eurozone shrank 0.2% in the first three months of 2013 after a 0.6% decline in the previous quarter, and below analysts' expectations of a 0.1% slump. Moreover, German economy expanded less than forecast in the first quarter, while French economy slipped into a recession and Italy's contraction exceeded estimates. As the slowdown has spread to the Euro core, policy makers are now facing more pressure to introduce bold measures to boost growth. During the last policy meeting the ECB has cut its benchmark interest rate to a record low of 0.5% and mentioned that another rate cut is possible if the economy will continue struggling to grow.
"The first-quarter contraction reinforces pressure on the ECB to come up with further measures to try and support euro-zone growth," said Howard Archer, an economist at IHS Global Insight in London. "An interest rate cut to 0.25% looks ever more possible, while the ECB will also continue to look into the case for a negative deposit rate and ways of getting more credit through to smaller companies."
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