S&P: Eurozone Highly Likely to Enter Recession in 2012

A sign displays the name of Standard & Poor's financial rating services in its offices in Paris. Photo by EPA/BGNES

There is a 40% possibility that the eurozone enters a recession in 2012, commented a representative of credit rating agency Standard & Poor's Saturday.

Late Friday S&P downgraded the credit ratings of 9 euro zone member states, including France, Spain and Italy, and revised the outlooks of all common currency countries except Germany and Slovakia to negative.

"We forecast that there is a probability of 40% for a recession in the eurozone for 2012, which would likely be around 1.5%," commented S&P analysts Moritz Kremer, who manages credit ratings for Europe.

In its announcement Standard & Poor's has opined that efforts of EU countries, including a recently negotiated fiscal stability pact, were not sufficient to emerge from the debt crisis.

EU leaders, including European Commissioners and member state ministers, have reacted with skepticism at the rating downgrades, arguing they were tendentiously timed.

German Foreign Affairs Minister Guido Westerwelle, who has been critical of rating agencies' role, said that the move "artificially maintains tension" just at a time when eurozone governments have braced to tackle the financial crisis.

At an emergency sitting of the French cabinet called by President Nicolas Sarkozy, PM Francois Fillon stated that France's downgrade from AAA to AA+ should not be taken too dramatically.

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