Eurozone unemployment hits new high

— Unemployment in the eurozone rose to a new high in October - 11.7 percent - according to official data released Friday. But the head of the European Central Bank tempered the bad news by predicting that the region’s economy would begin to recover next year.

Mario Draghi, the central bank president, cautioned that “We haven’t gotten out of the crisis yet.” But he told Europe 1 radio in Paris, “The recovery for the entire eurozone will no doubt begin in the second half of 2013.”

That was a firmer forecast than Draghi gave earlier last month, when he said only that growth next year would be weak. And it came as separate data indicated that inflation continued to fall, giving the central bank more leeway to pump cash into the economy if needed.

Draghi’s statement, along with tentative indications that countries such as Spain and Portugal are getting a grip on their economic problems, held out hope that a turning point in the eurozone crisis might be on the distant horizon.

“Clear progress is visible in the dismantling of economic imbalances in the eurozone,” economists at the German insurer Allianz said in a note Friday. “The reforms are bearing their first fruits.”

Draghi acknowledged that government austerity measures would bring “a short-term contraction in economic activity.”

Business, Pages 34 on 12/01/2012

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