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Sunday 15th of February 2009
February 13, 2009

Euro zone economy growth plummets 1.5%


by Kay Murchie
”Euro

Recession in the euro zone has taken a firm grip of the 16-member nation after the economy contracted by 1.5% in the October to December period and 1.2% on the year.

According to statistics body Eurostat, this is the fastest rate of decline since the euro zone was formed in 1999.

Germany, which is Europe’s largest economy, contracted by 2.1% in the fourth quarter of 2008 - its worst quarterly performance since German reunification in 1990.

Meanwhile, France’s economy contracted by 1.2% in the fourth quarter, while Italy experienced a fall of 1.8% - the worst performance since 1980. Spain’s economy shrank by 1%.

The Dutch economy contracted by 0.9% during the quarter while Austria fell by 0.2%. Meanwhile, the Portuguese economy contracted by 2%.

The euro zone, as a whole, entered recession in November.

Ken Wattret, economist at BNP Paribas, described the European contractions as ‘huge‘, while another analysts said the recession was far from over.

Today’s figures will almost certainly put pressure on the European Central Bank (ECB) to cut rates. The ECB kept the rate unchanged in February after lowering it to 2% in January. The next meeting is on 5 March.

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