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Eurozone economy shrinks after period of stagnation

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Michael Bastasch Contributor
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The economy of the eurozone and the European Union at large had zero growth in the first quarter of 2012, according to Eurostat. In fact, GDP shrank by 0.2 percent in the second quarter for both political entities.

When compared to the same time last year, GDP in the eurozone has contracted 0.4 percent.

While total GDP for the eurozone has shrunk, some individual countries have actually seen their economies grow when compared to last year.

Compared with the same time last year, Finland’s economy has actually grown 0.6 percent and Germany’s economy grew a full percentage point.

However, some eurozone members are seeing significant economic decline.

Greece’s economy shrank 6.2 percent compared to last year and the economy of Italy contracted 2.5 percent compared to last year. Cyprus, has also shrank considerably — 2.4 percent.

Greece was bailed out in 2010, but the country has a high unemployment rate of 23 percent and has been in recession since 2008. Another bailout fund for 31 billion euros has been delayed until September, following a review of Greece’s finances.

Cyprus’ central bank predicts their economy will shrink 1.1 percent by the end of 2012, according to the AFP. University of Cyprus economists estimate the contraction will be larger — 1.5 percent.

The country is still negotiating with the EU and the International Monetary Fund over how much bailout money it will need. It’s estimated that Cyprus will need 15 billion euros to keep its 17 billion euro economy afloat.

Italy has not yet needed bailout funds, but the country is in a deep recession and Italy’s public debt and budget deficit have reached an all-time high, according to CNBC. Italy is under pressure to seek assistance from other eurozone members as a way to keep borrowing costs down, which remain high despite austerity measures taken by the government.

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