Euro Area Officially in Recession

Politics » BULGARIA IN EU | November 14, 2008, Friday // 00:00

The euro area is officially in recession after Eurostat, the Statistical Office of the European Communities released flash estimates showing that in the second quarter of 2008 growth rates were -0,2% in the Euro Area and 0,0% in the EU.

The Gross Domestic product (GDP) declined by 0.2% in both the euro area and the EU during the third quarter of 2008, compared with the previous quarter. This follows a 0.2% contraction in the 15-nation area in the previous quarter from April to June.

Two quarters of negative growth define a technical recession.

The news was widely anticipated and follows data showing that Germany and Italy, two of the biggest eurozone economies, are already in recession.

On Thursday, figures showed the German economy, one of the world's largest, had shrunk 0.5% in the third quarter, following a 0.4% drop in the second quarter.

Spain's economy also shrank in the third quarter, the first such drop since 1993. Analysts are now convinced that a slump in household spending and a property crisis are likely to push the Spanish economy into recession as well next quarter.

The UK is expected to join the roll call of European countries in recession with a bleak Bank of England forecast suggesting that Britain is already there.

France is not faring too much better, but its economy did manage to expand in the third quarter much to the surprise of most analysts.

Official data showed that the French economy grew by 0.1% in the June to September period.

Compared with the same quarter of the previous year, seasonally adjusted GDP grew by 0.7% in the euro area and by 0.8% in the EU in the third quarter of 2008, after +1.4% and +1.7% respectively in the previous quarter.

During the third quarter of 2008, US GDP decreased by 0.1% compared with the previous quarter, after +0.7% in the second quarter. Compared with the same quarter of the previous year, GDP rose by 0.8% in the US (+2.1% in the previous quarter).

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