The euro zone is in its first technical recession since its inception after the economy contracted for the second time in a row quarter-on-quarter in the July-September period, an official estimate showed this morning.
The European Union's statistics office, Eurostat, estimated that the economy of the 15 countries using the euro shrank 0.2 per cent in July-September against the previous quarter after contracting by the same amount in April to June.
Two consecutive quarters of shrinking growth are a widely accepted definition of technical recession.
Year-on-year economic output grew by 0.7 per cent in the third quarter - half of its rate in the second. Both numbers were in line with expectations of economists polled by Reuters.
The euro zone performance was weaker than that of the United States, where output fell 0.1 per cent on the quarter and grew by 0.8 per cent in annual terms.
The quarterly decline was prompted mainly by a technical recession in the euro zone's biggest economy, Germany, and the third-biggest, Italy.
The second-biggest, France, defied market expectations of a similar fate, growing by 0.1 per cent in the third quarter.
The fourth-biggest economy, Spain, also contracted in the July-September period by 0.2 per cent and the European Commission expects the country will be in recession after expected negative growth in the fourth quarter.
The sharp slowdown in growth has reduced demand for oil and therefore diminished inflationary pressures.
Eurostat said on Friday that inflation in the euro zone was zero on a monthly basis in October, confirming its earlier estimate that price growth slowed to 3.2 per cent year-on-year from September's 3.6 per cent.
The main reason behind the slower price growth was a 2.9 per cent monthly fall in energy costs.
What the European Central Bank calls core inflation, a measure excluding volatile energy and unprocessed food components, came to 0.4 per cent on the month for a 2.4 per cent annual rise, down from 2.5 in September and 2.6 in August.
Reuters