World Watch
EUROPE</br></br>Euro-Zone Economy</br></br>Is in Early Stages</br></br>Of a Mild Recession</br></br>A growing number of economists say they believe Europe is in the early stages of a mild recession. Sharp falls in manufacturing activity, business confidence and employment on both sides of the Atlantic since the Sept. 11 terrorist attacks in the U.S. have convinced some economists that the euro-zone economy is shrinking slightly this quarter and will continue to do so in the next, meeting the conventional definition of a technical recession, or two quarters of economic contraction. Goldman Sachs slashed its euro-area growth estimate for next year to 0.6% from 1.7%, and in a report to clients predicted the economy would shrink at an annual rate of 0.5% to 1% this quarter and next. Citing "a massive hit" to earnings expectations in October, Lehman Brothers in a research note cut its forecasts and said two quarters of contraction are now possible. Credit Suisse First Boston last week increased its estimate of chances of an "outright recession" for the euro zone to one in three.