Eurozone now officially in recession

Friday, November 14, 2008

The European Central Bank governs the Eurozones banking
Image: Eric Chan.

The Eurozone is now officially in a recession, due to the recently released figures showing that, in the third quarter of 2008, the economy shrunk by 0.2%.

For a recession to be official, the economy must have shrunk for at least two consecutive quarters. This is the case as the Eurozone's economy, which also shrunk by 0.2% in the second quarter of this year.

Howard Archer, the chief European economist for Global Insight commented on these results. "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," he stated.

This development comes after two large countries in the Eurozone, Germany and Italy announced that they were in a recession.

Gilles Moec a senior economist at the Bank of America also commented on the results."Looking ahead, we can expect further quarters of negative GDP growth, until the third quarter of 2009, simply because so far we have not had in the GDP figures the full impact of the credit market crisis," he said.

Despite the economy shrinking according to quarter-on-quarter results, year-on-year results for the third quarter of 2008 still show a small growth in the economy, although the growth is less then 0.1%.

The fifteen members of the Eurozone are France, the Republic of Ireland, Italy, Germany, Belgium, the Netherlands, Portugal, Austria, Finland, Slovenia, Malta, Luxembourg, Spain, Greece and Cyprus.