EURO ZONE GDP DOWN BY 0.6%

GDP fell by 0.6% in the euro area (EA17) and by 0.5% in the EU27 during the fourth quarter of 2012, compared with the previous quarter, according to flash estimates published by EUROSTAT, the statistical office of the European Union. 
In the third quarter of 2012, growth rates were -0.1% and +0.1% respectively.

This is the synthesis on the (bad) status of the Q4 GDP released today by EUROSTAT [read document]. 

Figure1. The time course of GDP: Q1 2006 - Q4 2012

Table1. Quarterly growth rates of GDP in Europe.

The data confirmed the downward trend in both the EA17 and the EA27 areas. What worries the market analysts is that the worsening of the Q4 GDP is larger than it was unexpected. Only for Germany seems likely to observe during the rest of 2013 a GDP growth. 
Meanwhile France has announced that in 2013 the target of the 3% GDP deficit will be dissatisfied. 
Things are expected to get even worse for the other Euro peripherals countries. Spain and Italy are in deep water. 

In Spain:

• The government is extremely unpopular and it still has many unpopular spending decisions to take. Domestic tension remains high and with still rising unemployment, it could get worse. Which could spawn yet more anti-centralisation from the regions.
• Lowering Spain wages has made Spain more “competitive”, but only in European wage terms.
• Unfortunately, Spain’s only competitive "advantage" is lower wages: Spain isn’t a leader in the value-added factors of mature European economies;
• While European manufacturers may well be looking to move production to Spain because of low wages, it doesn’t help the strong Euro makes the whole country uncompetitive  on the world stage, and that European consumers aint consuming very much.
• Emigration of the best and brightest adds to the demographic time bomb ticking in the Spain pension funds.
• Although the 25% plus Spain unemployment probably underestimates the black economy – it’s a simple fact the whole Spanish private sector is massively overleveraged, especially as family heads are losing their jobs. Falling wages and job losses increase the burden. Banks remain massively vulnerable to rising retail distress.
• All the above without even mentioning fact the economy is burdened by millions of unsellable homes with no one likely to buy. 

In Italy:

• The result of the coming soon election upsets the Euro "elites".
• In the course of the last year, the financial measures adopted by the Monti's government have torn down the manifacturing capability of the country. 
• Around ninety thousand firms have ceased their activity in 2012 and twelve thousand have gone bankrupt. 
• The industrial production in 2012 has fallen by 6,7% (Figure 2)
• The consumption of energy power has decreased by 5,6%. (Figure 3)
• Automotive fuel products, with a delivery day more, have identified the following factors: the gasoline in the complex showed a decline of 13.7% (-95,000 tonnes) compared to January 2012, and the transport diesel by 5.3% (-98,000 tons). (Figure 4)
• Italy, along with Greece, Spain, Malta and the Baltic States, is part of the group of countries where "there is a high risk of entering into poverty and low chance of getting through the creation of a massive poverty trap". This critical social issue has been described by Lazlo Andor (EU Commissioner for Social Affairs) in the 2012 EU report on unemployment and social developments [here]
• The employment rate (61,2%) is one of the lowest in EA27. Only Greece (59,9%) and Hungary (60,7%) show rates of employment worse than Italy. (Figure 5)

Figure 2. Industrial production in Italy december 2012 - december 2012

Source:  Italian National Institute of Statistics (ISTAT).

The red curve represents the monthly seasonally adjusted index. The gray curve is the moving average (three terms)

Figure 3. Consumption of power energy (billion kWh)

Source: Terna (The Terna Group is the first grid operator for electricity transmission in Europe. )

In the horizontal axis the monthly values. 

Figure 4. Consumption of oil products in Italy 2006 - 2012

 In black and gray are drawn the trend lines.

Figure 5. Employment rates vs. Unemployment rates

The "therapy" that the Monti's government has dictated to the country undoubtedly has failed and has severely affected the italian society as well as the italian economy.