However, growth declined to less than 4.0 percent in the July-September quarter of 2011 and recorded only 0.9 percent in the October-December quarter. Regarding European economies, since the second half of 2011, fiscal austerity measures and financial institutions’ tightening of their lending stance have dampened business and household sentiment.
Economic activity in some European countries is increasingly sluggish because the countries have fallen into a vicious cycle, in which the deterioration in economic  2  BIS central bankers’ speeches  activity leads to a further worsening of the financial conditions of governments and financial institutions. There have been some signs of recovery recently, such as an improvement in economic sentiment in Germany.