The eurozone economy shrank in the final three months of last year, depressed by low investment and a weak industrial sector.
But the decline in the region's economy was only modest, leaving economists undaunted in their prediction that the region was set for a pick-up this year.
Eurostat, the EU statistical agency, said today that gross domestic product in the eurozone fell by 0.2 per cent in the fourth quarter, after rising by the same amount in the third quarter. Investment declined by 0.8 per cent, with industry sliding by 1.6 per cent.
The decline in the eurozone economy was moderated by continued growth in services particularly financial and business services and a continued small rise in household consumption.
The fourth quarter saw further economic weakness in member states such as Germany, but also a decline in the French economy for the first time in many years. The UK economy also stopped growing for the first time in almost a decade, although the US economy expanded slightly.
Most economists think the fourth quarter of last year marked the low point for the eurozone - a view shared by the European Commission itself.
Confidence in economic prospects has been boosted by a slew of positive comments from top central bankers. Sir Edward George, governor of the Bank of England, spoke yesterday of an early spring for the global economy after chairing a meeting of the Group of 10 leading central banks.
Mr Alan Greenspan, chairman of the US Federal Reserve, said last week there was evidence that the US economy was already expanding again, after having been officially declared in recession. This renewed confidence about imminent global recovery is in itself likely to boost output, by increasing investment intentions.
However, most commentators do not expect the eurozone economy to return to its long term average rate of growth - an annual expansion of between 2 and 2.5 per cent - until towards the end of the year at the earliest. Moreover, trends in unemployment tend, in particular in countries with strong labour laws such as many eurozone member states, to lag changes in economic growth.
This means that unemployment could continue to rise for a while in many member states, creating political problems ahead of important elections in Germany and France.
Financial Times Service