“Euro-area economic data due this week will probably show the damage inflicted by the region’s sovereign debt crisis with the worst quarterly decline in output for almost four years.
Gross domestic product shrank 0.4 percent in the fourth quarter, according to the median of 45estimates gathered by Bloomberg News. That would be the biggest decline since the first quarter of 2009, when GDP fell 2.8 percent in the wake of the collapse of Lehman Brothers Holdings Inc. The data is due to be published on Feb. 14.
While measures to stem the region’s debt turmoil have helped curb sovereign bond yields from Spain to Greece, at least seven countries of the 17-nation bloc are in recession, leaving 18.7 million people out of work. The European Central Bank President Mario Draghi said last week that “economic weakness” will prevail in early 2013 even as the economy shows confidence stabilizing “at low levels.”
The fourth quarter “is probably the trough of the cycle, Draghi is hopeful that it will be,” said Marchel Alexandrovich, an economist at Jefferies International Ltd. in London. “We should see some improvement in economy in the first half of this year. The question is, whether it’s strong enough” given the risks that lie ahead, he said….”
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