Eurozone officially falls into recession
Eurozone economies fall into recession
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Friday, 14, Nov 2008 10:47
The eurozone economies were today confirmed to be in recession.
Across the 15 nations of the eurozone, GDP contracted by 0.2 per cent in the third quarter – following a 0.2 per cent shrinkage in the second quarter of 2008.
The technical definition of recession is two consecutive quarters of negative growth.
Across the whole of the 27 nations of the European Union GDP was down 0.2 per cent in the third quarter – but no recession is reported as the second quarter saw zero per cent growth.
The downturn was most greatly noted in Germany, the UK and Italy – where quarterly output dropped 0.5 per cent.
Growth was strongest in Slovakia and the Czech Republic – reporting quarterly growth of 1.5 per cent and one per cent respectively.
"Not only did the third quarter contraction in GDP confirm that the Eurozone is now in recession, but latest data and survey evidence indicate that the fourth quarter is likely to see a sharper fall in GDP as the financial crisis bites harder," said Howard Archer, chief UK economist at Global Insight.
"The weakness was widespread with the Germany, Italian and Spanish economies all contracting, the Dutch economy stagnating and French growth only edging up."
Mr Archer now expects eurozone GDP to grow one per cent overall in 2008 and contract by 0.5 per cent in 2009 as it is hit by "sharply weaker global growth, extended financial sector problems, rising unemployment and very weak business and consumer confidence.
"Given these factors, it will take time for sharply lower oil prices, the retreat of the euro, lower interest rates and fiscal stimulus in a number of countries to generate recovery."