Eurozone recession deepens with record GDP drop

The economy of the nations sharing the euro slumped further in the final quarter of 2008, contracting by a record 1,5% while the European Union as a whole joined it in recession, EU data showed on Friday.

For the eurozone’s 15 nations last year it was the third straight quarterly contraction, according to flash estimates published by Eurostat, the Statistical Office of the European Communities.

The contraction was even worse than the 1,3% fall predicted by analysts polled by Dow Jones newswires as the credit crunch and global economic downturn showed its teeth.

For the wider EU of 27 nations the similar 1,5% drop in gross domestic product (GDP) saw it fall into recession, defined as two consecutive quarters of economic contraction.

It has narrowly avoided formal recession previously thanks to 0,0% growth in the second quarter of 2008.

The speed and depth of the recession was illustrated by the drop from 0,2% GDP contraction in the third quarter to 1,5% in the fourth.

For 2008 as a whole, including the period before the world learnt the truth about sub-prime mortgages and toxic bank assets, GDP grew by 0,7% in the euro area and by 0,9% in the 27-nation EU.

The shrinking EU economy was amply illustrated in figures issued earlier on Friday showing the European new cars sales slumped in January to the lowest level for 20 years.

Sales fell by 27% in January from the figure in January last year, the European Automobile Manufacturers Association said. — AFP

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