Belgium fell back into recession in the second half of last year, data showed on Wednesday, the first euro zone member not subject to a bailout program to do so.
It paved the way for what is expected to be a very difficult 2012 for the 17-member bloc, both core economies and those in the debt-ridden periphery.
Gross domestic product (GDP) in Belgium, the bloc’s sixth-largest economy, shrank by 0.2 per cent in the fourth quarter, following a quarterly contraction of 0.1 per cent in the July-to-September period.
Two consecutive quarters of contraction is generally accepted by economists as the minimum for an economy to be considered in a recession.
Belgium is often cited as a harbinger of things to come in Europe and many countries in the region are already sliding toward recession, hit by the euro zone debt crisis and a wave of austerity required to cure it.
Final quarter figures for the euro zone, which grew by 0.2 per cent in the third quarter, will be published on Feb. 15.
Germany, France, Italy and the Netherlands are also due to release their GDP estimates on that day. Spain said on Monday its economy had shrunk in the fourth quarter.
Greece and Portugal, which with Ireland are being bailed out by the European Union and others, are both struggling in recession.
A Reuters poll in January predicted that the euro zone as a whole will contract 0.3 per cent in the coming year.
Economists said on Wednesday it had come as no surprise to see Belgium’s recession confirmed. Indeed the 0.2-per-cent contraction was slightly better than some had expected.
Few also expect any improvement in the first three months of 2012, notably after the new Belgian government imposed austerity measures in December designed to save €11.3-billion ($15.5-billion).
Private households in particular are downbeat, the consumer sentiment index falling to a 2½-year low in January.
“In order to sell the [austerity]measures, our politicians have had to talk a different language. … They have to say the situation is serious. Saying this makes people feel less comfortable,” said Etienne De Callatay, economist at Bank Degroof.
Economists broadly expected growth in the second quarter, the rate dependent on the health of trade partners. Belgium is among the most open economies in the world.
“There could be some upward potential coming from outside,” said Steven Vanneste of BNP Paribas Fortis. “Financial tensions are easing, so I think the worst of the economic crisis should be behind us. We see stabilization right now but it’s still in a very fragile state.”
Year-on-year, Belgium grew 0.9 per cent in the fourth quarter for a 1.9-per-cent total growth in 2011.